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FACTORY  STORESKEEPING 


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FACTORY 
STORESKEEPING 

The  Control  and  Storage  of  Materials 


BY 

HENRY  H.  FARQUHAR 

ASST.  PROFESSOR  OF  INDUSTRIAL  MANAGEMENT,  HARVARD  GRADUATE  SCHOOL  OF 
BUSINESS  ADMINISTRATION;  CONSULTING  MANAGEMENT  ENGINEER 


FIRST  EDITION 


McGRAW-HILL  BOOK  COMPANY,  INC. 
NEW  YORK:  370  SEVENTH  AVENUE 

LONDON:  6  &  8  BOUVERIE  ST.,  E.  C.  4 

1922 


COPYRIGHT,  1922,  BY  THE 
McGRAW-HiLL  BOOK  COMPANY,  INC. 


THE    M  A  r  I.  E    I'KESS     YORK    PA 


FOREWORD 

Great  managers  are  primarily  concerned  not  with 
today,  but  with  to-morrow.  This  is  true  because  they 
have  taken  advantage  of  the  possibility  of  standardizing 
those  features  of  their  work'  which  lend  themselves  to 
standardization  so  that  they  are  left  free  to  give  their 
personal  attention  where  it  is  really  most  needed— 
to  matters  which  cannot  be  systematically  controlled. 
The  administration  of  any  industrial  enterprise  may  be 
broadly  divided  into  the  management  of  men,  and  the 
management  of  things  such  as  plant,  equipment,  and 
materials.  The  former  constitutes  the  art  in  manage- 
ment, while  the  latter  is  susceptible  to  a  more  scientific 
regulation.  If  the  administration  of  industrials  is  to 
become  less  of  an  art  and  more  of  a  science,  a  sharp 
division  must  be  made  between  those  matters  which 
from  their  very  nature  must  remain  largely  in  the 
realm  of  art — the  functions  of  dealing  with  human 
beings  and  with  intangible  questions  of  policy — and 
those  which  may  be  controlled  through  predetermined 
and  systematic  procedure. 

Even  where  the  effort  has  been  made  to  develop  the 
scientific  side  of  management,  however,  the  popular 
imagination  has  been  caught  by  that  part  of  it  which 
deals  with  shop  planning  and  incentive  payment,  and 
more  than  its  share  of  the  average  manager's  serious 
attention  is  absorbed  by  the  actual  making  of  goods. 
The  fact  that  such  planning  and  payment  to  be  truly 
effective  must  be  based  on  unspectacular  standardization 
of  equipment  and  materials  has  not  been  sufficiently 
stressed,  and  the  fact  that  no  part  of  the  business  can 
function  to  best  advantage  until  all  parts  function  to 
good  advantage  is  just  beginning  to  be  appreciated. 


497540 


vi  FOREWORD 

Thousands  of  dollars  are  lost  in  hundreds  of  factories 
through  unorganized  handling  of  materials.  Although 
the  cash  statement  is  scrutinized  with  fatherly  care, 
once  part  of  this  cash  is  converted  into  materials,  which 
are  of  considerably  greater  potential  value  than  an 
equivalent  amount  of  money,  this  form  of  wealth  tends 
thenceforth  to  be  neglected  and  the  attention  remains 
centered  in  the  cash  drawer.  The  fact  is  that  the 
interests  of  the  cash  drawer  are  best  served  by  manage- 
ment so  organized  and  controlled  as  to  serve  directly 
production  needs,  and  good  industrial  relations  in  the 
factory  are  well-nigh  impossible  without  control  not  only 
of  materials  but  also  of  all  other  controllable  features  of 
the  work.  It  is  for  this  reason  that  the  attempt  has  been 
made  in  this  volume  to  show  how  one  of  these  functions  of 
management  may  to  a  considerable  extent  be  removed 
from  among  the  ever-present  troubles  of  the  manager. 

As  used,  the  term  materials  will  be  understood  to 
include  stores  or  raw  materials  and  factory  supplies,  and 
worked  materials  or  work  in  process  and  partly  or  com- 
pletely finished  parts.  The  book  deals  with  the  replen- 
ishment, storage  and  disbursement  of  these  two  classes 
of  materials,  but  excludes  the  administration  of  work 
while  in  process,  after  it  passes  from  storage  to  the  shop, 
which  is  known  as  routing  and  which  does  not  fall  within 
the  scope  of  this  volume.  Unless  otherwise  stated,  the 
discussion  applies  to  both  stores  and  worked  materials; 
and  the  viewpoint  is  that  of  the  manager  of  production 
of  the  medium  sized  plant  engaged  in  manufacturing  a 
variety  of  articles  both  to  stock  and  to  order.  No^ 
attempt  is  made  to  outline  a  " system"  for  any  specific 
type  of  factory,  since  local  variations  necessitate  local 
adaptions ;  rather  the  guiding  principles  of  effective  mate- 
rial control  which  are  applicable  alike  to  all  types  and 
kinds  of  production  are  emphasized  and  illustrated  by  ex- 
amples of  detailed  procedure  which  has  been  found 
effective  in  numerous  instances. 


FOREWORD  vii 

The  object  of  this  book,  then,  is  to  outline  the  princi- 
ples and  methods  by  which  one  of  the  problems  of 
industrial  management — the  handling  of  materials— 
may  be  standardized  and  cheapened  through  scientific 
regulation,  in  the  hope  that  the  time  and  energy  of  the 
manager  may  be  thus  released  for  the  task  of  Manage- 
ment in  the  highest  sense,  that  of  bringing  about  the  very 
best  conditions  for  everybody  concerned. 

HENRY  H.  FARQUHAR. 

BELMONT,  MASS., 
May,  1922. 


ACKNOWLEDGMENT 

To  the  late  Frederick  W.  Taylor,  whose  pioneer  work 
in  formulating  principles  of  management  and  develop- 
ing sound  methods  by  which  those  principles  were  made 
effective,  I  am  indebted  for  the  general  viewpoint  as  well 
as  for  whatever  in  the  following  pages  is  sound  in  theory 
and  effective  in  practice. 

I  wish  to  express  appreciation  of  the  help  and  advice 
received  in  the  preparation  of  this  volume  from  my  wife, 
Elizabeth  Holton  Farquhar;  from  L.  Herbert  Ballou; 
from  Charles  R.  Howard;  from  Harlow  S.  Person,  and 
from  Hugo  Francke. 

My  thanks  are  due  also  for  forms  and  materials 
supplied  by  the  Lewis  Manufacturing  Company, 
Walpole,  Mass.;  by  the  Bethlehem  Steel  Company, 
Bethlehem,  Pa.;  by  the  Russell,  Burdsall  and  Ward 
Bolt  and  Nut  Company,  Port  Chester,  N.  Y.;  by  the 
Universal  Winding  Company,  Providence,  R.  L;  and 
by  the  W.  H.  Griffin  Shoe  Company,  Manchester,  N.  H. 

H.  H.  F. 


IX 


CONTENTS 

PAGE 
•  ° 
FOREWORD v 

CHAP. 

I.  RELATION    BETWEEN    MATERIAL    CONTROL    AND    PRODUC-  *s 

TION 1 

II.  THE  MATERIAL  CYCLE.     PREREQUISITES  TO  CONTROL      .    .  15 

III.  PERSONAL.     ORGANIZATION.     LOCATION  OF  DEPARTMENTS  .  26 

IV.  THE  BASES  OF  MATERIAL  REPLENISHMENT 38 

V.  THE  MATERIAL  BALANCE  SHEETS 53 

VI.  THE  PURCHASING  DEPARTMENT  AS  RELATED  TO  MATERIAL 

CONTROL 70  ^ 

VII.  TRAFFIC,  RECEIVING  AND  INSPECTION  DEPARTMENTS    ...  85^ 
VIII.  THE  STORE  ROOM  LAYOUT,  EQUIPMENT  STORAGE  AND  PRO- 
TECTION.    MAINTENANCE  STORES 98  *" 

IX.  CLASSIFICATION  AND  SYMBOLIZATION  OF  MATERIALS.    .    .    .  140  V 

X.  MATERIAL  ACCOUNTING;  INVENTORIES;  STATISTICS 159 

APPENDIX 175 

INDEX  .  .....    177 


XI 


\ 


FACTORY  STORESKEEPING 

THE  CONTROL  AND  STORAGE  OF  MATERIALS 

CHAPTER  I 

RELATION  BETWEEN  MATERIAL  CONTROL  AND 
PRODUCTION 

SUMMARY:  The  Functions  of  a  Manufacturing  Plant.  All  Contribute  to 
Production.  Standardizing  for  Material  Control.  Simplification.  Speci- 
fications. Maintenance  of  Quality.  Determination  of  Quantity. 
Methods  of  Administrative  Control. — The  Ideal  Material  System. 
Knowledge  Required  to  Secure  it.  Speculative  Purchasing. — Relation 
between  Manufacturing  Efficiency  and  Material  Control.  All  Costs  are 
Costs  of  Production.  Storage  and  Handling  Costs  must  be  Low  as 
Possible.  Some  Typical  Cases. — Summary  of  Material  Losses.  Lack 
of  Standards  of  Variety  and  Quality.  Excessive  Supply.  Deficient 
Supply.  Faulty  Management. 

The  Functions  of  a  Manufacturing  Plant. — A  manu- 
facturing establishment,  as  the  name  implies,  exists 
primarily  for  the  purpose  of  turning  out  a  product  for 
sale  at  a  profit.  This  fact  curiously  enough  seems  some- 
times to  be  overlooked.  Activities  other  than  produc- 
tion proper  are  of  course  necessary  in  order  that  the  main 
purpose  for  which  the  plant  exists  may  be  accomplished, 
and  it  is  necessary  in  order  to  avoid  a  lack  of  balance 
in  management  that  each  activity  be  seen  in  its  true 
perspective  without  misleading  lights  and  shadows.  The 
main  functions  in  the  administration  of  any  manufactur- 
ing undertaking  are: 

The  Financial  and  accounting,  or  the  raising  and  regu- 
lation of  funds  by  which  the  business  is  carried  on. 

The  Engineering  or  technical,  which  determines  the 
design  and  composition  of  the  product. 

i 


« *«•"    . .  v  :  j*.f  %  • 

MiMO  *K. '.•:/*".%»*  FACTORY  STORESKEEPING 

The  Production,  the  prime  function  of  transforming 
raw  material  into  a  salable  product. 

Selling,  which  creates  a  demand  for  and  disposes  of 
what  is  manufactured. 

Personnel,  which  has  to  do  with  the  policies  and  prac- 
tices grouping  themselves  about  the  human  element. 

All   minor   activities   of   the  plant   may  be  grouped 
under  one  or  another  of  these  broad  major  functions, 
and  all,  it  must  be  remembered,  spring  from  and  must 
primarily  serve  production  since  this  is  the  activity  for 
which  the  whole  establishment  was  founded.     Looking  at 
the  matter  in  this  light,  the  Production  function  really 
embraces  finance,  engineering,  selling  and  personnel,  but 
deals  more  specifically  with  activities  in  turning  out  a 
product  through  the  use  of  land  and  buildings,  equip- 
ment,   organization,    materials,    production    and    cost 
systems,  and  so  on.     Now,  if  we  have  learned  anything 
from  the  great  amount  of  careful  work  which  has  been 
done  in  an  attempt  to  reduce  the  management  of  industry 
to  less  of  an  art  and  more  of  a  science,  it  is  that  it  is  just 
as  necessary  to  control  one  of  these  variables  with  which 
the  manager  must  deal  as  it  is  to  control  any  other  and 
that  the  business  must  be  looked  upon  as  being  organic 
and  not  as  a  series  of  disjointed  and  unrelated  activities. 
This  viewpoint  brings  home  at  once  the  fact  that  none  of 
these  production  activities  can  continue  unless  selling 
provide  a  market,  that  machines  are  useless  unless  power 
be  available  to  drive  them,  that  men  are  useless  unless 
they  be  provided  with  work  to  do  and  with  facilities  to  do 
it,  and  that  in  turn  all  of  these  activities  must  cease 
unless   materials   are   supplied   as   needed.     It   is   only 
through  the  conduct  of  manufacturing  operations  that 
the    material   problem   in    the    strictly    manufacturing 
business  arises — eliminate  the  production  activity  and  the 
need  of  materials,  aside  from  miscellaneous  office  sup- 
plies and  the  like,  disappears. 

One  of  the  major  functions  of  production,  then,  is 
that  of  providing  its  needs  in  materials  and  of  standard- 


MATERIAL  CONTROL  AND  PRODUCTION  3 

izing  material  activities  so  that  these  needs  may  be 
adequately  met.  The  function  of  material  supply, 
instead  of  being  relegated  to  the  background  and  con- 
sidered as  a  "  necessary  evil,"  must  thus  take  its  place 
beside  those  ordinarily  given  greater  consideration. 
Only  by  so  doing  may  a  balanced  management  be 
brought  about ;  only  when  material  regulation  has  been 
standardized  may  it  be  pushed  to  the  background  to 
make  room  for  some  of  its  brothers  which  are  less 
amenable  to  control. 

Standardizing  for  Material  Control. — Constant  em- 
phasis is  placed  throughout  this  volume  upon  the  impor- 
tance of  standardizing  the  various  features  of  the  whole 
material  problem  of  the  factory,  with  special  emphasis 
upon  certain  phases  of  such  standardization.  As  applied 
to  material  problems,  standardization  embraces  the 
following : 

1.  Simplification,  or  the  reduction  of  the  variety  of 
different  kinds  of  material  dealt  with. 

2.  Specifications,    or   the   determination   of   requisite 
quality  of  each  item  of  material  to  be  carried. 

3.  Maintenance  of  Quality,  or  the  measures  necessary 
to    see   that   materials    actually   received    conform    to 
predetermined  specifications. 

4.  Determination  of  Quantity,  or  the  question  of  ascer- 
taining and  regulating  how  much  and  when  to  buy 
various  materials  under  different  conditions. 

5.  Methods  of  Administrative  Control,  or  the  measures 
by  which  the  whole  material  cycle  is  brought  under 
systematic  operation. 

The  major  emphasis  in  the  present  volume  is  given  to 
the  last  two  topics,  that  is,  to  the  regulation  of  inventory 
and  the  methods  of  coordinating  and  controlling  the 
whole  material  procedure  from  beginning  to  end — both 
aspects  of  factory  storeskeeping  of  vital  importance 
entirely  out  of  proportion  to  the  attention  they  usually 
receive,  yet  the  fundamentals  of  which  must  be  grasped 
by  the  men  responsible  for  materials  in  the  factory 


4  FACTORY  STORESKEEPING 

if  this  function  of  production  is  continuously  to  play  its 
part  in  the  struggle  for  high  output  and  low  costs.  It  is 
because  of  the  comparatively  little  serious  attention 
usually  given  to  these  two  phases  of  material  handling 
as  contrasted  with  that  usually  devoted  to  questions  of 
variety  and  quality,  that  these  problems  of  quantity  and 
control  have  been  given  right-of-way  in  this  book. 
Before  passing  to  these  in  detail,  however,  it  is  necessary 
to  get  a  clear  picture  of  the  relation  between  them 
and  simplification,  determination  of  specifications,  and 
maintenance  of  quality. 

Simplification. — Reduction  of  variety  of  materials 
necessary  under  given  conditions  may  ordinarily  be 
accomplished  without  a  corresponding  reduction  in  the 
number  or  variety  of  products  manufactured,  desirable 
as  the  latter  is  in  many  instances.  But  without  touch- 
ing the  question  of  the  number  of  products  to  be  made, 
it  is  usually  possible  through  careful  investigation,  to 
eliminate  many  items  heretofore  carried  through  analyz- 
ing exact  needs  and  rigorously  eliminating  needless  frills 
and  varieties,  and  by  making  parts  interchangeable  so  far 
as  possible. 

The  necessity  of  conserving  manufacturing  facilities 
for  strictly  military  needs  during  the  war  gave  a  tre- 
mendous impetus  to  reduction  of  variety,  substitution 
of  standard  or  interchangeable  parts,  and  elimination, 
of  all  materials  for  which  there  was  not  a  real  need. 
The  War  Industries  Board  did  notable  work  in  this  con- 
nection, and  it  is  significant  that  much  ground  gained  at 
that  time  has  been  held  and  that  the  work  of  simplifi- 
cation is  progressing  steadily  in  almost  every  industry 
fostered  by  the  Department  of  Commerce. 

As  a  result,  many  instances  of  remarkable  financial 
savings  in  various  lines  of  work  through  centering  atten- 
tion upon  essentials  only,  might  be  cited,  and  the  effort 
to  cut  down  the  number  of  articles  with  which  the  factory 
supply  service  must  deal  is  one  of  the  essentials  of  gopd 


MATERIAL  CONTROL  AND  PRODUCTION  5 

material  management.  Many  storerooms  contain  up- 
wards of  25,000  different  items;  a  reduction  of  even  a 
fraction  of  this  number  is  usually  worth  all  it  costs, 
through  saving  storage  space,  interest  on  investment, 
labor  of  handling  and  keeping  inventory  correct,  balance 
sheet  work  and  all  of  the  clerical  operations  necessary  to 
put  through  any  transaction  in  requisitioning,  purchas- 
ing, receiving  and  inspecting,  storing,  issuing  and  account- 
ing for  any  item  of  material.  The  degree  of  control  which 
may  be  exercised  over  material  routine  generally,  varies 
inversely  with  the  number  of  items  between  which  atten- 
tion must  be  divided;  it  is  therefore  essential  to  reduce 
these  to  the  very  minimum  consistent  with  successful 
operation  of  the  plant. 

Specifications. — The  determination  of  the  specifi- 
cations or  the  requisite  quality  of  each  item  of  material 
to  be  retained  after  simplifying  our  needs  is  a  technical 
matter  of  the  utmost  importance.  It  would  be  out  of 
place  to  attempt  .to  treat  a  subject  of  this  size  and  impor- 
tance in  a  volume  devoted  primarily  to  a  different 
purpose.  No  manufacturing  undertaking,  however,  can 
be  successfully  carried  on  until  raw  material  specifica- 
tions, in  the  form  of  standards  of  composition,  of  dimen- 
sion, of  strength,  of  finish,  of  color,  and  so  on,  have  been 
determined,  and  a  strict  regulation  of  quantity  is  pred- 
icated upon  a  predetermination  of  quality  because  the 
very  act  of  setting  a  strict  limit  on  the  amount  of  goods 
to  be  carried  necessitates  being  sure  that  each  item  of 
this  supply  be  suitable  for  the  uses  to  which  it  is  to  be 
put. 

Maintenance  of  Quality.— Standard  specifications  may 
prove  to  be  a  positive  harm,  however,  unless  means  be 
taken  to  put  them  to  constant  and  effective  use,  for 
unless  this  be  done  the  specifications  themselves  lend  a 
false  feeling  of  security  as  to  quality.  On  the  one  hand, 
in  setting  specifications  it  should  be  remembered  that 
"good  enough  is  best;"  on  the  other  hand  once  necessary 


6  FACTORY  STORESKEEPING 

quality  has  been  determined  by  those  who  know,  it 
becomes  the  imperative  duty  of  those  entrusted  with 
inspection  of  quality  to  see  that  no  material  not  up  to 
these  minimum  requirements  be  passed  for  use.  The 
safeguards  which  must  be  thrown  around  the  technical 
inspection  work  itself,  therefore,  are  here  dealt  with  as 
one  of  the  essentials  of  current  material  handling  upon 
which  adequate  regulation  rests. 

It  will  thus  be  seen  that  there  is  a  very  intimate  rela- 
tion between  simplifying  varieties,  determining  stand- 
ards of  quality,  inspection  to  enforce  conformity  to  those 
standards,  determination  of  quantity  and  standardization 
of  methods  of  material  management.  These  five  must  go 
hand  in  hand  if  ideal  results  are  to  be  secured. 

The  Ideal  Material  System. — From  a  material  stand- 
point the  fundamental  idea  upon  which  war  is  conducted 
is  so  to  organize  and  manage  that  the  man  at  the  front 
is  enabled  to  keep  his  mind  continuously  on  his  main 
duty — the  defeat  of  the  enemy — without  handicapping 
him  in  any  way  with  questions  of  supplies  of  any  kind. 
He  should  be  able  absolutely  to  forget  material.  Ideally 
and  actually  he  should  be  able  to  reach  his  hand  behind 
him  at  any  time  and  receive  exactly  what  he  needs 
— no  more,  no  less — at  the  moment.  An  over  supply 
will  impede  his  action,  consXime  his  time  and  attention 
and  result  in  waste;  a  deficiency  either  in  quantity  or  in 
quality  will  render  him  helpless.  That  is  the  basis  upon 
which  the  supply  service  of  the  army  is  organized- 
material  and  ration  supply  should  be  automatic  and 
governed  absolutely  by  current  needs. 

For  the  man  at  the  front  substitute  the  man  at  the 
machine,  and  the  above  ideal  becomes  that  of  the  suppty 
service  in  the  factory,  for  the  same  reasons  and  to  be 
attained  through  similar  methods. 

To  make  this  supply  automatic  in  either  case,  we 
must  first  know  the  requirements;  we  must  know  the 
original  outfit  in  quality  and  in  quantity  that  a  man 


MATERIAL  CONTROL  AND  PRODUCTION  7 

needs  when  he  takes  up  his  work  and  the  probable  rate  of 
use  of  each  article  while  on  the  job.  Then,  if  we  are  to 
send  forward  the  right  quantity  of  the  right  materials  to 
him  just  when  wanted,  many  other  things  are  necessary. 
We  must  know  how  long  it  takes  to  secure  the  goods 
ourselves  from  our  supplier,  and  how  long  it  takes  us  to 
forward  them  from  ourselves  to  the  man  who  is  to  use 
them.  It  is  necessary  to  know  how  much  of  the  goods 
are  on  hand  in  the  store  room,  how  much  has  been 
ordered  to  be  shipped,  how  much  has  been  promised  for 
specific  uses  and  therefore  not  available  for  filling  sub- 
sequent requests,  and  from  this  how  much  is  still  avail- 
able for  future  demands.  Besides  these  things,  to  make 
the  supply  reliable,  there  must  be  a  definite  location  for 
each  article  of  goods  in  stock,  knowledge  as  to  exactly 
where  and  how  much  of  each  is  on  hand,  and  ability  to 
get  them  in  and  out  quickly.  This,  of  course,  requires 
that  means  be  taken  to  safeguard  materials  while  in 
storage  and  to  keep  accurate  records  of  amounts. 
Accuracy  in  handling,  is  essential,  all  items  should  be 
checked  all  the  way  down  the  line  as  far  as  is  possible 
consistent  with  speed  and  with  the  personnel  employed. 
Theoretically  no  goods  may  pass  out  of  one's  hands 
without  a  receipt :  this,  of  course,  is  not  always  possible 
in  war,  or  necessary  in  war  or  industry.  But  efficient 
transportation  and  sufficient  checks  at  each  stage  are 
necessary;  therefore,  proper  identification  of  the  goods 
is  required  so  as  to  enable  anyone  into  whose  hands  they 
pass  to  know  what  the  goods  are  and  for  whom  they 
are  intended.  In  addition  to  all  these  considerations 
of  quantity  and  time,  in  both  war  and  industry  there 
are  considerations  of  quality,  and  in  addition  to  this  in 
industry  the  further  consideration  of  cost,  by  which  is 
meant  not  simply  the  original  purchase  cost,  but  the  final 
use  or  time  cost  considering  the  effectiveness  and  dura- 
bility of  the  particular  item  in  actual  use. 

These  are  a  few  of  the  many  details  to  be  brought 


8  FACTORY  STORESKEEPING 

under  control  in  well-regulated  material  handling.  They 
are  not  matters  to  be  looked  after  by  an  inexperienced 
clerk.  Neither  does  the  answer  lie  in  devising  a  material 
"system"  and  thereafter  leaving  it  to  run  itself  or  to  be 
supervised  by  otherwise  preoccupied  officials  or  those 
who,  because  their  duties  do  not  bring  them  face  to  face 
daily  with  production  troubles,  may  not  realize  the  vital 
dependence  of  manufacturing  efficiency  upon  material 
control.  There  is,  strictly  speaking,  no  such  thing  as  a 
material  function  in  itself  in  the  manufacturing  business, 
and  those  manufacturers  who,  in  addition  to  producing, 
deliberately  indulge  in  the  buying  of  materials  for  re-sale 
and  "playing  the  market"  are  by  so  much  engaging  in  a 
separate  line  of  business  as  distinct  as  possible  from  that 
for  which  presumably  their  investment  in  plant  and 
equipment  was  made — a  dangerous  speculative  business 
in  which  they  would  in  most  cases  do  better  not  to  indulge. 
Even  though  a  conscious  buying  for  re-sale  be  not  per- 
mitted, there  are  many  plants  which  are  even  worse  of! 
because,  lacking  this  definite  policy,  they  have  yet  failed 
to  substitute  the  proper  one  of  governing  purchase  from 
the  standpoint  of  manufacturing  needs.  The  tendency 
in  the  best  plants  today  is  to  look  upon  the  control  of 
material  as  a  production  function  and  to  govern  the 
replenishment  of  materials  in  accordance  with  the 
requirements  for  production  during  a,  reasonable  future 
period.  One  of  the  oldest,  largest,  and  most  progres- 
sive manufacturing  plants  in  this  country  adheres  stead- 
fastly to  this  policy,  and  has  done  so  for  a  number  of 
years. 

Relation  between  Manufacturing  Efficiency  and  Mate- 
rial Control. — The  vital  dependence  of  manufacturing 
efficiency  on  the  strict  regulation  of  materials  is  realized 
most  by  those  closest  to  and  responsible  for  production. 
Although  a  blunder  on  the  part  of  the  purchasing 
agent,  for  example,  may  result  in  just  censure  of  that  indi- 
vidual, it  is  after  all  production  which  has  to  bear  the  cost 


MATERIAL  CONTROL  AND  PRODUCTION  9 

of  the  blunder,  for  the  cost  of  what  he  buys,  as  well  as  the 
cost  of  his  failure  to  buy  when  he  should,  alike  must 
eventually  be  borne  by  the  cost  of  the  product  turned 
out.1  Production  must,  therefore,  suffer,  in  addition 
to  leaks,  any  evils  of  over-  or  under-stocking;  and 
curiously  enough  both  of  these  losses  are  most  often 
encountered  in  the  same  plant  simply  because  insufficient 
attention  is  paid  to  material  problems  in  general.  The 
only  economic  justification  for  storing  materials  in 
quantity  is  that  through  this  reservoir  production  may 
be  regularized  and  thus  cheapened.  It  therefore  follows 
that  the  cost  of  the  product  must  not  be  unduly  increased 
through  storing  too  much  nor  through  failure  to  store 
enough,  for  in  either  event  production  is  not  securing  the 
benefit  of  storage  to  which  it  is  entitled.  There  are  but 
two  ways  in  which  materials  may  be  sold  at  a  profit: 
they  may  be  re-sold  in  the  condition  in  which  they  were 
bought  at  higher  than  the  purchase  price,  or  they  may 
be  processed  to  a  finished  or  partly  finished  state  and  sold 
for  more  than  the  cost  of  raw  material  plus  manufacture. 
Obviously  excess  materials  cannot  be  processed,  which 
leaves  us  only  the  first  alternative  of  re-sale — as  before 
stated,  a  questionable  policy  for  a  manufacturing 
concern. 

The  now  classic  case  of  a  government  establishment 
may  be  recalled  in  this  regard.  There  was  here,  of 
course,  no  element  of  speculation,  but  the  loose  methods 
of  regulating  materials  then  prevalent  and  still  common 
were  in  use.  Upon  the  initiation  of  changed  methods  of 
management,  the  stores  situation  was  thoroughly  over- 
hauled. Among  other  things  which  came  to  light  was  a 

1  This  regardless  of  the  cost  methods  used,  for  even  where  a  so-called 
"Standard"  or  predetermined  cost  of  material  entering  the  product  is 
used  (any  excess  over  this  cost  being  charged  to  Profit  and  Loss),  the 
balance  sheet  must  yet  show  that  articles  produced  are  sold  at  more  than 
all  costs  of  producing  them  (blunders  included)  or  the  business  must 
eventually  discontinue.  We  are  only  obscuring  the  approach  of  the  evil 
by  absorbing  such  losses  in  a  separate  account. 


10  FACTORY  STORESKEEPING 

supply  of  materials  above  current  needs  amounting  to 
more  than  $122,000. 

This  occurred  in  a  government  institution,  however, 
for  which  allowances  may  be  made.  Let  us  look  at  some 
happenings  in  private  plants.  The  author  vouches  for 
the  accuracy  of  these  stories,  although,  of  course,  names 
cannot  be  mentioned.  In  a  machine  shop,  upon  a  similar 
round-up  40  tons  of  idle  stock  was  unearthed  from  around 
the  machines,  under  the  benches,  and  on  the  floor  of  one 
department.  This  consisted  of  raw  stock  cached  by 
the  workman,  excessive  amounts  delivered  to  the 
machine  and  not  disposed  of,  partly  worked  parts  side- 
tracked for  "rush"  jobs,  and  so  on.  There  was  no 
speaking  acquaintance  between  material  regulation, 
either  purchasing  or  issuing,  and  production  needs. 

In  another  plant  the  purchasing  agent  bought  only 
for  current  needs  as  judged  from  comparison  of  reports 
of  materials  on  hand  and  sales  orders  which  were  fur- 
nished him.  From  this  placing  of  responsibility  for  such 
matters  and  from  the  methods  in  use,  his  ability  to  do  so 
was  questioned  although  he  surpassed  the  average  pur- 
chasing agent  in  capability.  An  actual  investigation 
showed  more  than  $50,000  worth  of  excess  miscellaneous 
items  on  hand.  Any  of  those  items  could  have  been 
secured  in  3  weeks;  some  were  on  hand  in  sufficient 
quantities  to  last  10  years.  The  intent  was  good  in 
this  case,  but  human  limitations  and  faulty  detail  made 
its  accomplishment  impossible. 

The  purchaser  for  one  medium-sized  factory  was  a 
bargain  hunter — one  of  the  most  costly  and  tenacious 
diseases  to  which  purchasing  agents  are  heir.  Responsi- 
bility for  designation  of  how  much  to  buy  had,  up  to 
this  time,  never  been  clearly  defined,  and  was  usually 
exercised  by  the  purchasing  agent  alone;  he  originated 
and  approved  replenishment  orders  unless  some  special 
occurrence  made  consultation  necessary.  One  morning 
he  beamed  into  the  office  with  the  news  that  there  had 


MATERIAL  CONTROL  AND  PRODUCTION  11 

just  been  delivered  18  months'  supply  of  a  certain  item 
which  he  had  obtained  at  an  "  exceptional  reduction  in 
price."  The  works  manager  replied  that  they  had  just 
discontinued  the  use  of  that  particular  item  altogether. 
In  this  case  the  material  was  immediately  re-sold  (at  a 
lower  price  than  was  paid  for  it),  but  such  " bargains" 
often  form  very  considerable  portions  of  the  excess 
supplies  shown  up  when  materials  on  hand  are  measured 
against  requirements. 

A  somewhat  elaborate  " stores  system"  had  been 
installed  for  keeping  track  of  partly  worked  parts  in 
another  factory.  Due  to  a  multiplicity  of  detail  whereby 
the  main  requirements  of  successful  stores  management 
had  been,  however,  missed,  the  difference  in  inventory  as 
shown  on  three  supposedly  accurate  interlocking  records 
was  surprising,  and  $15,000  worth  of  material,  as  per  the 
book  records  (in  this  case  under  the  control  of  the  cost 
department),  could  not  be  physically  located  or  otherwise 
accounted  for.  Those  entrusted  with  the  work  of  record- 
keeping  did  not  realize  the  importance  of  it  and  had  no 
particular  incentive  to  keep  it  accurate;  the  cost  man 
regretted  that  it  became  necessary  to  " write  off"  such 
a  loss,  but  otherwise  attached  no  particular  significance 
to  the  matter. 

Akin  to  this  is  the  case  in  another  plant  where  the 
works  manager  in  all  important  cases  must  send  a  per- 
sonal representative  to  the  store  room  to  check  the 
accuracy  of  the  book  balance  reported  to  him  from  the 
balance  sheets.  These  again  are  under  the  control  of 
the  cost  officer 

A  case  came  to  light  in  an  otherwise  exceptionally 
progressive  factory  where,  because  of  fairly  uniform 
production  requirements,  it  was  thought  to  be  unnecessary 
to  apportion,  or  reserve  on  the  books,  material  for  each 
manufacturing  order  in  advance  of  its  disbursement. 
Instead,  the  average  consumption  over  a  period  of  weeks 
was  determined,  to  which  was  added  a  liberal  factor  for 


12  FACTORY  STORESKEELUNG 

safety,  and  the  resulting  quantity  was  specified  as  the 
" minimum"  below  which  goods  on  hand  should  not  be 
allowed  to  fall  without  issuing  a  replenishment  order. 
This  minimum  was  entered  on  the  balance  sheet  for  the 
item,  and  book  balances  were  carefully  checked  with  bin 
contents  from  time  to  time.  To  give  added  assurance, 
over  the  minimum  quantity  in  the  bin  was  placed  a  red 
cloth  as  a  signal  to  the  storekeeper,  before  touching  the 
minimum  stock,  to  remind  the  balance  clerk  to  issue  a 
replenishment  order.  This  procedure  seemed  to  the 
manager  to  be  water-tight,  but  after  a  few  months' 
operation  a  costly  shortage  occurred  on  the  item.  Upon 
investigation  it  was  found  that  recent  demands  had  so 
far  exceeded  average  demands  (upon  which  the  "  mini- 
mum" was  based)  that  stock  became  exhausted.  Rather 
than  increase  the  minimum  limit  to  cover  such  excep- 
tional demands  and  thereby  increase  the  inventory 
of  idle  material  during  all  times  of  normal  consumption, 
the  firm  was  persuaded  to  adopt  the  common  sense  policy 
of  looking  ahead  in  these  matters  and  apportioning  all 
such  material  immediately  the  need  became  known. 

No,  efficiency  in  production  cannot  be  obtained  under 
such  handicaps.  Money  is  carefully  guarded  and 
checked  to  the  penny;  materials  are  potentially  of  far 
greater  importance  to  the  manufacturing  business  than 
an  equivalent  amount  of  money.  They  should  be  as 
carefully  guarded  and  controlled. 

Summary  of  Material  Losses. 

A.  Lack  of  Standards  of  Variety  and  Quality. 

B.  Due  to  Excessive  Supply. — Excess  materials,  not  dis- 
posed of,  cause  any  one  or  all  of  the  following  losses: 

1.  Loss  of  Interest  on  Investment. — -The  money  which 
is  spent  for  material  in  excess  of  what  is  needed  for 
production  during  a  reasonable  period  might  otherwise 
be  loaned  at  interest  or  reinvested  profitably  in  the  busi- 
ness, thus  producing  more  money;  or  it  may  be  used  to 
obviate  the  necessity  of  borrowing,  thus  producing  a 


MATERIAL  CONTROL  AND  PRODUCTION  13 

direct  saving;  invested  in  idle  material,  however,  it 
adds  a  cost  of  doing  business — the  cost  of  the  loss  of 
interest  on  money  needlessly  spent. 

2.  Loss   of  Insurance  on  Goods. — A  heavy  inventory 
imposes  a  heavy  insurance  cost,  or  a  heavy  loss  in  case 
of  fire,  usually  both. 

3.  Excess  Storage  Space. — Every  cubic  foot  of  storage 
space  has  a  rental  value.     Taxes,  insurance,  depreciation 
and  repairs  on  the  building,   interest  on  investment, 
heat,  light,  cleaning — all  such  costs  for  any  space  through- 
out the  plant  must  be  charged  against  what  occupies  that 
space,  be  it  an  operating  machine  or  dead  stock,  and  this 
charge  must  eventually  appear  against  the  cost  of  the 
product  which  the  space  is  supposed  to  benefit.     In 
the  former  case  the  product  of  the  machine  may  offset 
or  more  than  offset  these  rental  charges:  in  the  latter 
case  the  charges  go  to  swell  expenses  which  ordinarily 
can  not  be  returned  by  the  excess  materials  themselves 
and  which  therefore  add  to  the  burden  which  must  other- 
wise be  shouldered. 

4.  Deterioration. — In  few  cases  do  materials  of  any 
kind  retain  their  original  quality  during  the  passage  of 
time.     Deterioration,  depreciation  or  obsolescence  will 
sooner  or  later  cause  a  loss  in  idle  stock. 

5.  Reduced  Stock  Turnover. — During  normal  times  of  the 
buying  and  selling  markets  the  ideal  condition  as  regards 
storage  in  the  manufacturing  business  would  be  that  in 
which  no  storage  whatever  is  necessary.     Imagine  a 
factory  where,  immediately  upon  receipt,  raw  material  is 
delivered  to  the  machine,  processed  at  once  and  immedi- 
ately shipped  upon  completion.     Such  a  factory  would 
have  a  stock  turnover  limited  only  by  the  time  neces- 
sary for  the  longest  operation  on  the  product.     The  cost 
of  material  entering  into  the  product  under  such  condi- 
tions would  obviously  be  less  than  that  in  which  storage 
is  necessary,  for  in  storing  we  have  the  fixed  costs  men- 
tioned previously,  the  cost  of  added  delivery,  handling 


14  FACTORY  STORESKEEPING 

and  transportation  charges,  and  possibly  deterioration 
or  obsolescence  in  the  materials  themselves.  No  matter 
for  how  short  a  period  we  store,  therefore,  the  cost  of  the 
stored  article  issued  to  the  shop  is  actually  greater 
(whether  it  show  on  cost  records  or  not)  than  is  the  cost 
of  a  non-stored  article.  The  profit  on  the  finished 
product  is  therefore  less;  or,  if  the  same,  that  part  of  it 
which  pertains  to  the  materials  occurs  fewer  times  per 
year.  It  is  more  profitable  to  make  2  per  cent  per  trans- 
action six  times  a  year  than  it  is  to  make  13  per  cent  only 
once  a  year.  This  is  a  point  overlooked  in  innumerable 
manufacturing  and  other  concerns. 

6.  Additional  Handling  and  Confusion. — Except  under 
fortunate  conditions  of  ample  and  well  arranged  storage 
space,  a  supply  of  material  in  excess  of  normal  needs 
almost  inevitably  results  in  shifting  locations,  additional 
piling,  unpiling  and  transporting,  additional  record 
keeping,  lack  of  definite  identification  and  consequent 
confusion  and  difficulty  in  finding  materials  quickly. 

C.  Due  to  Insufficient  Supply. — The  losses  which  may 
and  do  result  from  a  failure  to  have  on  hand  just  the 
article  desired  in  sufficient  quantity  when  needed  are  too 
frequent  and  obvious  to  merit  rehearsal.     A  warning 
may  be  thrown  in  here,  furthermore,  to  the  effect  that 
when  a  policy  of  governing  materials  strictly  by  produc- 
tion needs  is  determined  upon,   ample  safeguards  are 
necessary  to  insure  against  a  shortage.     One  such  occur- 
rence may  offset  many  times  the  cost  of  an  excessive 
supply. 

D.  Due     to     Misplaced     Responsibility    and     Faulty 
Routine. — Some  typical  instances  of  such  losses  were 
given  in  preceding  paragraphs,  and  since  the  causes  may 
be  innumerable  no  summary  will  be  attempted.     It  is 
largely  the  petty  annoyances  and  little  leaks,  however, 
in  themselves  often  insignificant,  which  in  the  aggregate 
amount  to  infinitely  more  than  it  would  cost  to  remedy 
them. 


CHAPTER  II 

THE  MATERIAL  CYCLE.     PREREQUISITES  TO 
CONTROL 

SUMMARY:  Classes  of  Materials — The  Material  Cycle — Sources  of 
Information — Forms  and  Functions  of  Each — Prerequisites  to  Control — The 
Fundamental  Principle;  Rules  for  Material  Regulation. 

In  Chapter  I  the  points  were  brought  out  that  effec- 
tive manufacture  is  absolutely  dependent  upon  effective 
regulation  of  materials,  that  ideal  material  management 
provides  a  regulated  movement  of  supplies  according  to 
actual  needs,  that  either  an  excess  or  a  deficiency  is  bad, 
and  that  constant  vigilance  is  necessary  to  guard  against 
these  and  other  losses,  and  finally  since  production  is  the 
activity  most  directly  interested  in  and  affected  by  these 
matters  that  the  regulation  of  them  should  rest  squarely 
upon  this  function  of  the  business. 

Classes  of  Material. — It  is  necessary  to  define  exactly 
what  we  are  talking  about  when  we  use  the  word 
"material."  Material  may  be  divided  into 

I.  Stores,  or 

(a)  Raw  materials,  and 
(6)  Factory  supplies 

II.  Worked  Materials,  or 

(a)  Partly  worked,  and 
(6)  Finished  parts 

Raw  materials  are  those  intended  for  use  in  the  product 
which  are  still  in  the  condition  in  which  we  bought  them. 
They  may  thus  be  finished  product  to  our  supplier  and 
raw  material  to  us. 

Factory  Supplies  include  all  stationery,  forms,  main- 
tenance and  power  supplies,  spare  parts  of  machines, 
lavatory  equipment  and  similar  miscellaneous  articles  of 
general  factory  use. 

15 


16  FACTORY  STORESKEEPING 

Worked  materials  on  the  other  hand,  consist  of  raw 
materials  on  which  some  processing  work  has  been  per- 
formed in  our  plant  looking  toward  the  conversion  of 
them  into  the  finished  product.  They  may  be  partly  or 
completely  finished  parts  or  products;  in  the  latter  case 
they  are  often  referred  to  as  " stock,"  and  they  may  be 
salable  in  both  conditions. 

Looking  at  Stores  from  a  slightly  different  angle,  we 
have: 

A.  Classified  Stores  or  those  which  we  ordinarily  keep 
on  hand  in  quantity  and  to  which  naturally  we  desire 
to   give   greatest   attention.     They   are,    as   the   name 
implies,    carefully   classified    and   strictly   regulated   in 
every  way  since  they  form  the  foundation  of  manufacture ; 
and 

B.  Unclassified  Stores  or  those  which  are  not  regularly 
stocked   but   are   ordered   for   special   purposes.     Here 
would   fall   items   such   as    chairs,    desks,    typewriters, 
special  orders  of  lumber  and  similar  items  not  carried 
regularly  in  the  store  room. 

Such  subdivisions  provide  not  only  a  convenient  means 
of  identification  of  the  various  items  in  the  store  room, 
but  are  desirable  for  accounting  and  other  purposes 
to  distinguish  those  parts  v  which  we  buy  from  those 
which  we  make. 

Although  this  volume  deals  primarily  with  stores,  and 
particularly  with  classified  stores,  many  of  the  considera- 
tions in  governing  this  class  of  material  apply  with  equal 
force  to  worked  materials.  In  the  case  of  worked  mater- 
ials, although  a  manufacturing  order  on  one  of  our 
production  departments  is  issued  to  renew  the  supply 
instead  of  a  replenishment  order  on  the  purchasing  agent, 
and  although  thereafter  there  are  similar  differences  in 
treatment,  yet  in  each  case  the  same  principles  of  control 
apply  and  the  same  general  sequence  of  operations  must 
be  gone  through. 


THE  MATERIAL  CYCLE  17 

The  Material  Cycle. — The  series  of  activities  in  secur- 
ing, storing,  and  disbursing  material  run  about  as 
follows : 

1.  The  determination  of  what  is  needed,  when,  and  in 
what  quantities. 

2.  The  placing  of  the  request  to  purchase — hereafter 
called   the  replenishment  order,  often  called  purchase 
requisition — with  the  Purchasing  Agent. 

3.  The  securing  and  filing  of  information  concering 
sources  of  supply. 

4.  The  securing  of  bids  or  quotations  for  the  article 
desired;  the  decision  as  to  price  and  suppliers. 

5.  The  placing  of  the  order  to  buy — hereafter  called 
the  purchase  order. 

6.  The  follow-up  of  outstanding  purchase  orders  to 
insure  delivery  when  needed. 

7.  The  receipt  of  the  goods. 

8.  The  count  and  inspection. 

9.  The  transportation  and  receipt  into  stores. 

10.  The  storage,  safeguarding  and  accounting  for  the 
goods  while  in  stores. 

11.  The   placing   of   the   request   to  issue — hereafter 
called  the  stores  or  worked  material  issue — with  the 
storekeeper. 

12.  The  disbursement  of  the  goods. 

13.  The  accounting  work  at  each  stage  of  the  trans- 
actions— the  recording  of  what  has  been  ordered,  what 
received;    balances    on    hand;    amounts    reserved    and 
amounts  still  available;  the  checking  and  paying  of  the 
bill;  costs  and  the  charging  into  and  out  of  stores;  the 
maintenance  of  inventory  records. 

The  phases  of  this  cycle  are  very  far  from  being  a 
series  of  disjointed  transactions — they  are  a  series  of 
interdependent  acts,  a  false  step  in  any  one  of  which  may 
produce  disastrous  production  consequences. 

Sources  of  Information — Forms  and  Functions  of 
Each. — The  various  forms  and  methods  used  in  material 


18  FACTORY  STORESKEEPING 

routine  will  necessarily  differ  in  individual  factories. 
For  the  sake  of  clearness  in  following  subsequent  discus- 
sion, the  names  and  functions  of  the  more  important 
sources  of  information  as  here  used  may  be  summarized. 
They  are  listed  in  the  order  in  which  chronologically  they 
usually  come  into  play  in  actual  operation. 

The  more  important  forms  are  illustrated  in  the  follow- 
ing chapters.  Those  shown  are  samples  only,  and  the 
reader  is  cautioned  that  for  his  own  particular  needs 
very  different  forms  may  be  required.  The  fact  should 
be  emphasized  also  that  too  great  variety  in  colored 
paper  on  which  these  various  forms  are  printed  should  be 
avoided,  but  forms  of  the  same  size  at  least  should  be 
printed  on  paper  sufficiently  different  to  avoid  confusion. 

Bill  of  Material — Parts  List. — A  list  made  out  by  the 
engineering  department  showing  drawing  and  pattern 
numbers,  quantities,  description,  and  composition  or 
reference  to  specifications,  of  each  part  of  the  product 
which  is  to  be  made  in  our  plant.  Various  other  sorts  of 
information  are  sometimes  shown  according  to  circum- 
stances. If  the  bill  be  extended  to  include  not  only 
worked  materials  but  all  raw  parts,  and  all  stores  enter- 
ing into  the  product,  it  is  usually  referred  to  as  a  List  of 
Parts. 

The  bill  of  material  is  thus  the  basis  of  all  needs  for 
manufacturing  material,  and  the  bill  itself  or  abstracts 
from  it  may  serve  for  making  these  needs  known  to  the 
persons  whose  duty  it  is  to  see  that  these  materials  are 
supplied. 

Purchase  Specifications — made  by  the  engineering  or 
other  technical  department,  show  complete  information 
as  to  the  characteristics  of  all  material  used  by  the  estab- 
lishment, drawn  up  for  use  of  the  purchasing  agent  and 
the  inspection  department.  Specifications  may  vary  all 
the  way  from  elaborate  detailed  physical  and  chemical 
characteristics  with  instructions  as  to  manufacture  and 
for  testing  the  finished  product,  down  to  the  simple 


THE  MATERIAL  CYCLE  19 

designation  of  a  well-known  trade  name  of  an  article  of 
standard  quality. 

Classified  Stores  Balance  Sheet  (or  Card) — the  most 
important  single  source  of  information  in  the  stores 
system.  It  is  the  central  means  by  which  most  questions 
regarding  the  status  of  material  are  answered  and  the 
principal  mechanism  by  which  systematic  material 
routine  is  controlled.  One  such  sheet  for  each  item 
shows  the  name  of  the  item,  the  time  necessary  to  renew 
the  supply,  the  symbol,  the  limits  for  replenishment, 
often  the  location  in  the  store  room,  with  columns 
for  entering  complete  information  as  to  material  out- 
standing on  purchase  orders,  material  issued  and  balance 
still  on  hand  in  the  store  room,  with  the  value  of  such 
supply,  with  the  addition  if  necessary  of  columns  showing 
amount  of  material  apportioned  or  reserved  for  specific 
uses,  and  amount  still  available  for  apportionment  to 
other  uses.  Through  the  balance  sheets  must  flow  a 
constant  stream  of  information  whereby  they  may  be 
kept  up  to  the  minute  in  record  of  transaction,  and  from 
the  balance  sheet  originate  all  requests  upon  the  purchas- 
ing agent  to  renew  the  supply  for  classified  stores  when 
a  predetermined  low  point  has  been  reached. 

Worked  Material  Balance  Sheet. — Similar  in  function 
and  operation  to  the  classified  stores  balance  sheet. 

Unclassified  Stores  Balance  Sheet. — Similar  in  purpose 
to  the  classified  stores  sheet,  but  much  simpler  in  opera- 
tion— since  on  it  are  recorded  only  transactions  dealing 
with  articles  ordered  especially  for  some  specific  purpose, 
ordinarily  to  be  issued  out  for  that  purpose  immediately 
upon  their  receipt  at  the  plant. 

Replenishment  Order.  (Purchase  Requisition). — 
A  requisition  on  the  purchasing  agent  to  buy  a  specific 
article  or  service.  Replenishment  orders  theoretically 
may  originate  with  any  one  in  the  employ  of  the  concern; 
practically,  however,  their  use  is  usually  limited  to  the 
heads  of  departments  and  the  balance  clerk,  the  former 


20  FACTORY  STORESKEEPING 

for  unclassified  items  only,  the  latter  for  either  classified 
or  unclassified.  In  all  cases  replenishment  orders  should 
pass  to  one  of  the  higher  authorities  for  approval. 

Purchase  Order. — The  formal  document  made  out  and 
signed  by  the  purchasing  agent  and  dispatched  to  the 
vendor  as  notice  to  him  that  we  desire  to  purchase. 
When  accepted,  it  becomes  a  contract.  It  must  there- 
fore be  entirely  complete  in  description  and  unambiguous 
in  language.  It  is  ordinarily  made  out  in  several  copies, 
such  as  the  balance  clerk's  copy,  the  receiving  clerk's 
copy,  the  purchasing  agent's  copy,  the  purchasing 
agent's  copy  by  serial  order  number,  the  auditor's  copy, 
the  foremen's  copy,  the  purchasing  agent's  tickler  copy, 
with  others  where  necessary. 

The  purchasing  agent's  tickler  copy  of  the  purchase 
order  is  a  carbon  copy  of  the  purchase  order  used  in  the 
purchasing  agent's  office  as  a  means  by  which  the  prog- 
ress of  delivery  of  goods  ordered  may  be  followed.  (See 
Chap.  VI.) 

Freight  Register. — Made  out  by  traffic  department  or 
other  representatives  of  the  firm  who  receive  packages 
from  the  railroad  or  other  transportation  agents.  It 
shows  number  of  package,  number  of  packages  received, 
from  whom  received,  weight,  transportation  charges, 
and  information  as  to  condition.  It  serves  as  a  summary 
of  receipts,  and  for  entering  transportation  charges 
against  particular  items. 

Notification  of  Receipt. — When  packages  are  received 
from  the  transportation  agent,  they  are  unpacked  and 
contents  checked.  For  each  such  shipment  a  notifica- 
tion of  materials  received  is  made  out  by  the  receiving 
clerk  as  notice  to  everyone  interested  that  materials 
are  on  hand.  This  serves  particularly  to  inform  the 
balance  clerk  of  this  fact  so  that  appropriate  entries 
may  be  made  as  to  receipt  on  the  proper  material  balance 
sheet,  and  is  the  means  by  which  the  vendors'  invoice 
is  checked  with  goods  actually  received. 

Material  Inspection  Report. — All  incoming  goods  must 


THE  MATERIAL  CYCLE  21 

be  inspected  for  quality.  Notice  of  decision  in  this 
respect  may  be  provided  on  the  notification  of  receipt 
form,  or  a  separate  form  may  be  used  for  the  purpose. 
If  so,  it  should  accompany  the  notification  of  receipt 
in  its  travel  through  the  plant. 

Returned  Goods  Report. — When  any  of  our  products 
are  returned  by  one  of  our  customers  a  report  must  be 
made  out  showing  what  has  be.en  received,  supported  by 
an  inspection  showing  what  if  anything  is  the  matter 
with  the  goods.  It  is  then  necessary  for  someone  to 
designate  what  disposition  shall  be  made.  The  report 
may  then  be  returned  to  the  receiving  clerk  as  his  author- 
ity for  disposition  of  the  goods.  This  report  serves  an 
important  function  in  providing  a  systematic  means  of 
disposing  of  articles  which  have  a  tendency  to  lie  around 
and  clutter  up  valuable  space. 

Bin  Tag. — A  tag  attached  on  or  near  each  bin  of 
material.  Whenever  material  is  put  into  or  taken  out 
of  the  bin,  a  notation  to  this  effect  is  made  on  the  proper 
bin  tag  for  the  material,  showing  date,  amount  put  in  or 
taken  out,  and  account  to  which  the  transaction  is  to  be 
charged.  The  bin  tag  furnishes  one  important  means  by 
which  accuracy  of  perpetual  inventory  is  maintained. 

Overflow  Bin  Tag. — In  case  the  regular  bin  provided 
for  a  certain  material  is  insufficient  to  hold  all  of  it,  it 
becomes  necessary  to  store  the  remainder  in  an  "  overflow 
bin."  In  this  case,  it  is  necessary  to  have  a  cross  refer- 
ence between  the  two  bins,  so  that  the  overflow  bin  tag 
is  placed  on  the  regular  bin  with  a  notation  on  it  as  to 
where  the  overflow  bin  may  be  found,  and  on  the  overflow 
bin  is  placed  the  regular  bin  tag  on  which,  as  additions 
to  or  withdrawals  of  stock  from  the  bin  are  made, 
proper  entries  are  recorded. 

Bin  Label. — A  label  to  be  attached  to  each  bin  or  other 
container  of  material,  showing  just  what  this  particular 
bin  holds  as  designated  by  whatever  system  of  identifica- 
tion is  employed. 


22  FACTORY  STORESKEEPING 

Stores  Issue. — The  means  by  which  stores  are  secured 
from  the  store  room.  Issues  are  made  out  by  the  person 
desiring  goods,  approved  if  necessary  by  the  proper  official, 
sent  to  the  storekeeper  as  his  authority  to  disburse 
goods,  and  must  contain  information  showing  exactly 
what  and  how  much  is  needed.  When  desired  goods 
are  removed  from  the  bin,  entry  is  made  on  the  bin  tag, 
goods  are  delivered  by  messenger  or  by  special  trans- 
portation men  to  whomever  is  to  receive  them,  his 
signature  secured  for  receipt,  and  the  stores  issue  is  then 
passed  to  the  balance  clerk  for  entry,  thence  to  the  cost 
department  for  accounting  purposes. 

Worked  Material  Issue. — This  serves  the  same  purpose 
for  worked  materials  as  the  stores  issue  does  for  stores. 

Stores  Credit. — This  is  the  reverse  of  the  stores  issue 
and  is  used  where  goods  are  returned  to  the  store  room 
after  being  once  issued.  The  function  and  general  pro- 
cedure is  the  same  as  with  the  stores  issue. 

Worked  Material  Credit. — A  similar  form  for  returning 
unused  worked  material  to  stores. 

In  order  to  distinguish  transactions  readily,  forms 
used  for  worked  materials  should  be  printed  with  differ- 
ent colored  inks  from  those  used  for  stores.  Stores 
forms  are  usually  printed  ia  black,  and  worked  materials 
in  red  ink. 

Move  Order. — A  request  on  the  transportation  men  to 
move  materials  or  other  objects  from  one  designated 
place  to  another.  It  may  be  used  to  follow  and  record 
the  movement  of  material  throughout  the  plant. 

Identification  Tag. — The  tag  attached  to  each  article 
or  lot  of  articles  in  transit  throughout  the  plant,  showing 
what  the  articles  are  and  for  whom  they  are  intended. 
It  corresponds  to  an  address  on  an  envelope  sent  through 
the  mail. 

Worked  Material  Received  in  Stores. — When  raw  mate- 
rial is  issued  to  the  manufacturing  department,  it  is  done 
upon  the  authority  of  a  stores  issue.  After  processing 


THE  MATERIAL  CYCLE  23 

it  may  be  returned  to  the  store  room  for  further  safe- 
guarding, when  it  must  be  accompanied  by  a  worked 
material  received  in  stores,  which  in  this  case  would 
perform  the  same  function  as  a  notification  of  receipt. 
It  is  information  to  the  storekeeper,  to  the  balance  clerk 
and  to  the  cost  clerk  whereby  their  respective  entries 
may  be  made. 

Stores  Count. — The  only  absolutely  certain  way  to 
maintain  perpetual  inventory  is  by  an  actual  physical 
count  of  goods  on  hand.  This  form  provides  a  means 
for  the  storekeeper  or  his  representative  to  report  back 
to  the  office  exactly  how  many  articles  of  various  kinds 
are  now  in  the  bins. 

Prerequisites  to  Effective  Material  Control. — In  the 
previous  chapter  it  has  been  indicated  that  the  problem 
of  material  resolves  itself  into  that  of  having  on  hand  at 
exactly  the  right  time  just  the  right  materials  in  just 
the  right  quantity  at  the  lowest  cost  consistent  with 
quality.  This  is  the  one  underlying  principle  of  material 
control.  Some  of  the  more  important  measures  to  be 
effected  in  putting  this  principle  into  operation  were  also 
indicated.  Without  presuming  to  make  the  list  com- 
plete, these  may  be  reviewed  and  supplemented,  and 
finally  a  set  of  working  rules  presented  by  which  they 
may  be  enforced  in  practice.  The  prerequisites  to  ade- 
quate material  handling  are: 

1.  Definite  requirements  in  materials  of  all  kinds. 
This  presupposes  standardization  of  quality  and  knowl- 
edge of  rate  of  use. 

2.  Knowledge  of  time  necessary  to  renew. 

3.  Minimum  cost  consistent  with  quality. 

4.  Record  of  amounts  ordered,  on  hand,  apportioned 
and  available. 

5.  Count  and  inspection  upon  receipt. 

6.  Definite  location. 

7.  Adequate  storage  and  safeguarding. 

8.  Strict  control  of  issue,  inventory  and  accounting. 


24  FACTORY  STORESKEEPING 

9.  Quick  and  efficient  transportation. 

10.  Definite  identification. 

11.  Classification  and  symbolization. 

12.  Centralization    of    authority    and    responsibility 
of  the  whole  material  function  proper  and  of  each  phase 
of  it. 

13.  Checks  and  balances  in  routine,  enforced  through 
thorough  supervision. 

Rules  for  Material  Regulation. — For  the  purpose  of 
energizing  the  principle,  and  of  enforcing  in  practice 
the  requirements  for  material  control,  certain  rules  are 
necessary.  They  are  here  listed  seriatim  without  com- 
ment or  explanation  since  the  various  considerations 
necessary  to  make  them  effective  in  operation  will  be 
outlined  in  some  detail  in  the  following  chapters: 

1.  Replenishment    of    material    must    be    governed 
strictly  by  requirements  for  production  during  a  reason- 
able future  period. 

2.  There  must  be  predetermined  specifications  for 
each  article  purchased. 

3.  All  replenishment  orders  must  be  in  writing  and 
may  be  issued  only  by  specified  persons. 

4.  All  replenishment  orders  must  be  approved  before 
they  may  be  honored  by  the  purchasing  agent. 

5.  All  purchase  orders  shall  be  in  writing  and  must  be 
systematically  followed  up. 

6.  All  persons  concerned  directly  in  the  transaction 
must  receive  copy  of  the  purchase  order. 

7.  There  must  be  a  careful  count  and  inspection  of 
all  goods  received  before  they  may  be  stored  or  released 
for  use. 

8.  Notice   of   receipt   of   materials   must   be   given 
immediately. 

9.  Responsibility    for    storage    and    issue    must    be 
centralized. 

10.  Storage  other  than  in  the  store  room  must  be 
reduced  to  a  minimum. 


THE  MATERIAL  CYCLE  25 

11.  The  store  room  must  be  accessible  only  to  author- 
ized persons. 

12.  Materials  must  be  stored  and  indexed  according 
to  a  systematic  scheme. 

13.  Movable,  interchangeable  storage  units  must  be 
used  as  far  as  possible. 

14.  Double-binning  must  be  used  whenever  possible. 

15.  A  perpetual  inventory  must  be  maintained  on  all 
goods. 

16.  Balances  of  materials  must  be  kept  on  bin  tags  and 
on   balance   sheets   with   constant   independent   checks 
between  them. 

17.  No  materials  must  be  issued  except  for  authorized 
purposes    upon    written    requests    signed    by    specified 
persons. 

18.  All  materials — raw,  worked,  and  factory  supplies — 
should  be  carefully  classified  and  preferably  mnemoni- 
cally  symbolized. 

19.  Organization  for  material  control  must  be  carefully 
formulated  and  made  effective  by  intelligent  and  persist- 
ent supervision. 


CHAPTER  III 

PERSONNEL.     ORGANIZATION.     LOCATION    OF 
DEPARTMENTS 

SUMMARY:  Duties  and  Qualifications  of  Material  Personnel. — Relation 
between  Departments.  Responsibility  for  Quality,  Quantity,  Time, 
Cost — Administrative  Organization  Chart. — Physical  Location  of  Offices. 

The  Members  of  the  Personnel — Duties  and  Quali- 
fications.— The  personnel  concerned  with  material  hand- 
ling must  necessarily  differ  both  in  quantity  and  quality, 
as  well  as  in  organization,  with  the  particular  factory 
dealt  with.  It  must  never  be  forgotten  that  no  material 
system  will  run  itself  — real  men  are  needed  in  addition 
to  best  methods.  In  any  strictly  regulated  material 
procedure,  however,  whatever  be  the  type  of  industry, 
or  character  of  personnel,  the  following  duties  must  be 
performed  regardless  of  whether  or  not  the  exact  titles 
used  below  are  employed  or  not,  or  of  whether,  as  in 
the  smaller  plants,  several  of  these  duties  may  be  com- 
bined in  one  person.  The  duties  and  qualifications  here 
summarized  are  confined  to  those  relating  to  material 
handling. 

Engineering  Department. — The  function  of  ascertain- 
ing the  proper  quality  of  goods,  considering  the  uses  to 
which  each  article  is  to  be  put.  The  results  are  written 
up  in  purchase  specifications,  which  are  repeated  or 
referred  to  on  the  balance  sheet.  The  function  of 
inspecting  and  testing  materials  upon  receipt  to  see 
whether  they  conform  with  these  specifications. 

The  person  in  charge  of  this  work  must  in  many  cases 
possess  technical  knowledge  of  a  high  order,  he  must 
possess  firmness,  backed  by  sound  judgment,  and  he 
therefore  requires  intimate  knowledge  of  production 


PERSONNEL  27 

needs.  He  may  often  be  assisted  to  good  advantage  by 
various  advisory  committees  appointed  for  the  purpose. 

Purchasing  Agent. — Responsible  for  purchasing  all 
goods,  as  and  when  called  for,  at  the  lowest  price 
consistent  with  quality.  Responsible  for  the  follow-up 
of  all  outstanding  purchase  orders,  and  for  seeing  that 
delivery  is  made  when  promised.  It  is  his  duty  to 
report  at  once  to  the  proper  person  any  change  in  condi- 
tions in  the  market  or  in  transportation  which  may  affect 
the  time  or  amount  of  an  order  of  goods. 

The  purchasing  agent  should  possess  shrewdness  and 
tact,  technical  knowledge  is  an  advantage,  and  he  must 
possess  common  sense  and  ability  to  hold  his  own  in  an 
argument. 

Balance  of  Stores  (or  Worked  Materials)  Clerk. — Called 
also  stock  clerk,  material  clerk,  material  record  clerk, 
etc.  The  general  function  of  a  central  clearing  house,  as 
embodied  in  the  balance  sheets,  for  all  information  in 
regard  to  material  on  hand,  material  outstanding  on 
order,  material  which  has  been  apportioned  or  reserved 
to  manufacturing  or  other  needs,  and  material  which  may 
be  further  apportioned  or  which  is  considered  available. 
It  is  the  duty  of  the  balance  clerk  to  keep  the  balance 
sheet  for  each  item  up  to  date  by  posting  any  one  of  the 
above  transactions  when  it  occurs,  to  see  that  perpetual 
inventory  is  accurately  maintained,  to  requisition 
materials  for  stock  as  necessary.  His  function  in  general 
is  similar  to  that  of  the  personal  ledger  bookkeeper  in  a 
bank. 

The  Qualifications  of  a  Balance  Clerk.^A  whole  lot  of 
common  sense.  Accuracy  absolutely  essential.  Fore- 
sight. Persistence,  and  constant  watchfulness. 

First-class  people  should  be  used  for  balance  sheet 
work.  Bookkeeping  is  more  or  less  mechanical,  but 
balance  work  requires  an  alert  mind.  Much  money  may 
be  lost  or  made  at  the  balance  sheets.  The  effectiveness 
of  the  balance  clerk's  work,  or  indeed  of  much  of  the 


28  FACTORY  STORESKEEPING 

whole  material  routine,  depends  to  a  considerable  extent 
upon  the  proper  functioning  of  the  planning  department, 
upon  which  he  is  dependent  for  much  of  the  information 
which  he  must  use. 

Works  Manager.- — Besides  his  general  supervisory 
duties,  it  is  specifically  his  duty  as  regards  material 
regulation  to  approve  all  replenishment  orders  before 
they  may  be  honored  by  the  purchasing  agent,  or  to  dele- 
gate this  authority  to  other  officials. 

Traffic  Manager. — An  important  duty  of  the  traffic 
manager  is  to  keep  those  responsible  for  the  ordering  of 
materials  fully  informed  as  to  traffic  conditions,  so  that 
ample  allowance  may  be  made  for  embargoes  or  other 
transportation  upsets.  Ordinarily  this  information 
should  be  reported  to  the  purchasing  agent  who  should 
then  be  held  responsible  for  interpreting  this  and  other 
relevant  information  into  an  allowance  affecting  the 
time  or  amount  of  ordering  goods.  It  is  the  traffic 
manager's  duty  also  to  receive  all  goods  from  the  trans- 
portation agent,  to  see  that  the  packages  correspond 
with  the  descriptions  on  the  way  bills  or  other  descrip- 
tive documents,  to  certify  the  transportation  charges 
to  the  auditor,  and  in  general  to  conduct  all  dealings  with 
transportation  agencies. 

Receiving  Clerk. — Unpack  all  packages  and  check 
contents  against  his  copy  of  the  purchase  order;  make 
out  a  notification  of  receipt  and  send  it  immediately  to 
persons  interested.  This  notification  or  an  accompany- 
ing form  must  contain  information  showing  acceptance 
or  rejection  by  the  engineering  department  or  other 
inspectors. 

Transportation  Men. — Move  materials  and  apparatus 
into  and  out  of  store  room  and  to  other  designated 
places  as  per  directions  issued  by  move  orders. 

Storekeeper. — Responsible  for  the  receipt  into  stores, 
arrangement  and  stowage,  custody,  and  issue  from 
stores  of  all  goods;  systematic  counts  to  insure  accuracy 


PERSONNEL  29 

of  perpetual  inventory;  reduction  of  spoilage  and 
deterioration. 

Auditor. — Checks  invoice  against  notification  of  mate- 
rial received  and  notifies  purchasing  agent  to  secure 
adjustment  for  rejected  materials.  Pays  for  those  goods 
passing  inspection,  or  if  the  policy  of  taking  all  cash  dis- 
counts immediately  upon  receipt  of  invoice  be  followed, 
pays  invoices  upon  presentation. 

Cost  Department. — Sees  that  proper  charges  and  credits 
are  made  and  summarized  for  all  material  issued  or 
returned,  and  that  these  transactions  are  properly 
taken  up  in  the  books  of  account. 

Besides  these  functions,  we  have  that  of  requesting 
material  for  use,  exercised  by  various  persons  throughout 
the  plant,  and  finally  that  of  planning,  which,  while  not 
absolutely  prerequisite  to  partial  material  control  is  yet 
the  center  of  production  activities  and  is  necessary  for  the 
accurate  forecasting  of  material  needs.  The  existence  of 
an  effective  planning  department  is  assumed  throughout 
these  discussions. 

Naturally,  depending  on  the  size  and  complexity  of 
the  business,  these  functions  may  not  be  exercised  by 
persons  as  listed  above.  Fewer  persons  may  be  required, 
or  many  more  may  be  necessary  in  larger  plants.  For 
instance,  there  may  be  one  head  material  man,  under 
whom  would  come  several  storekeepers,  several  balance 
clerks,  special  transportation  men  and  so  on.  Similarly, 
the  receiving  department  may  be  very  large  in  itself, 
consisting  of  several  men  and  several  stenographers; 
or  on  the  other  hand  the  storekeeper  may  in  smaller 
plants  serve  also  as  receiving  clerk,  although  this  practice 
is  open  to  considerable  danger.  Regardless  of  the 
number  of  persons  required,  however,  the  functions  to  be 
performed  remain  the  same,  and  ordinarily  it  is  a  mistake 
to  split  responsibility  for  any  one  function  between 
different  persons;  thus  special  considerations  may  require 
the  usually  unsatisfactory  resort  to  several  detached 


30  FACTORY  STORESKEEPING 

store  rooms  each  with  its  own  storekeeper;  these  should 
all  report,  however,  to  one  man  who  heads  the  storage 
function. 

Relation  between  Departments. — It  is  obvious  that 
responsibility  for  the  material  routine  rests  with  many 
officials  of  the  plant.  It  therefore  becomes  necessary 
in  individual  cases  to  determine  carefully  just  what  the 
relation  of  material  regulation  shall  be  to  each  of  the 
departments  affected,  as  well  as  the  relation  among 
the  members  of  material  personnel  themselves,  so  that 
there  may  be  no  overlapping  of  functions.  Although  no 
general  rule  can  be  laid  down  which  will  suit  all  cases, 
there  are  certain  necessary  relationships  which  should 
not  be  lost  sight  of  in  the  distribution  of  functions  in 
any  case.  On  the  one  hand,  a  too  great  concentration 
of  authority  and  responsibility  in  certain  hands  may 
lead  to  fraud  or  careless  work  due  to  a  lack  of  independent 
checks;  on  the  other  hand,  by  a  too  sparsely  scattered 
arrangement  work  may  be  so  slowed  up  as  to  be  insuffer- 
able. The  problem  lies  in  choosing  the  middle  ground 
between  these  two  extremes.  An  illogical  arrangement 
of  functions,  furthermore,  may  lead  to  complications 
quite  as  distressing  as  a  too  broad  or  a  too  narrow  sub- 
division. Consider  first  the  four  maj  or  elements  (quality, 
quantity,  time,  and  cost)  into  which  material  handling 
has  been  divided: 

Responsibility  for  Quality. — It  would  seem  axiomatic 
that  responsibility  for  quality  of  all  goods  should  be 
centered  in  the  engineering  or  other  technical  depart- 
ment. To  this  department,  in  the  final  analysis,  must 
be  referred  all  questions  of  quality  of  raw  material 
or  workmanship  which  affect  the  serviceability  of  the 
product  which  this  department  has  designed.  Since 
this  technical  department  specifies  in  the  beginning  the 
quality  of  what  is  to  enter  into  the  finished  product,  it 
would  seem  only  right  that  in  it  be  centered  responsi- 
bility for  the  inspection  of  incoming  goods  to  determine 


PERSONNEL  31 

whether  they  be  suitable  for  use  in  the  product.  Where 
a  simple  count  and  observation  is  all  that  is  necessary, 
as  is  usually  the  case  with  most  factory  supplies,  author- 
ity for  inspection  may  be  delegated  by  the  engineering 
department  to  the  receiving  clerk.  Responsibility, 
nevertheless,  for  this  particular  work  of  the  receiving 
clerk  must  still  be  centered  in  the  engineering  depart- 
ment. There  is  here  no  occasion  for  divided  or  ambigu- 
ous responsibility  in  the  receiving  clerk's  work,  since 
quality  inspection  is  a  function  which  may  be  clearly 
set  off  from  his  other  duties  and  for  which  he  may 
therefore  report  without  confusion  to  whomever  it  seems 
desirable.  "Divided  responsibility"  becomes  dangerous 
only  when  two  persons  are  responsible  for  the  same 
function  or  duty.  The  necessity  for  central  responsi- 
bility in  inspection  work  was  illustrated  in  one  plant 
where  it  was  perfectly  well  understood  that  all  technical 
inspection  was  to  be  done  by  the  engineering  department, 
but  where  it  had  been  tacitly  assumed  that  this  office 
was  not  interested  in  or  responsible  for  inspection  of 
materials  which  did  not  have  to  go  to  the  testing  labora- 
tory, such  material  having  been  customarily  passed  by 
the  receiving  clerk  without  specific  directions  for  him  to 
do  so.  This  lack  of  a  clear  definiteness  of  authority 
caused  the  loss  of  many  dollars  and  delayed  completion 
of  work  because  unsuitable  goods  were  passed  for  storage. 
Responsibility  for  Quantity. — The  determination  of 
what  quantity  of  material  to  buy  usually  rests  with  the 
production  department,  and  in  any  event,  must  be  deter- 
mined through  a  consideration  of  production  require- 
ments. As  indicated  previously,  and  as  will  be  discussed 
in  detail  further  on,  there  are  two  kinds  of  purchasing- 
speculative  and  routine.  Speculative  purchasing,  how- 
ever, when  it  is  done  for  a  manufacturing  establishment, 
should  be  limited  in  amount  and  in  time  by  dictates 
of  manufacturing  needs.  A  safe  rule  to  follow  in  this 
respect  is  that  when  the  purchasing  agent  is  permitted 


32  FACTORY  STORESKEEPING 

to  depart  from  reasonably  immediate  needs  of  production 
in  his  purchases,  the  burden  of  proof  must  be  distinctly 
upon  him.  In  routine  purchasing  the  purchasing  agent 
is  governed  much  more  strictly  by  current  replenish- 
ment orders. 

Responsibility  for  Time  Element. — The  time  element 
must  be  similarly  divided  between  production  and 
purchasing — the  one  specifying  when  to  renew  for  all 
items  as  per  material  balance  sheets  (production  require- 
ments), the  other  to  be  responsible  for  the  time  necessary 
to  secure  the  article  and  for  seeing  that  it  be  secured  in 
this  time. 

Responsibility  for  Cost  rests  of  course  with  the  pur- 
chasing agent.  In  practically  all  cases  which  I  have 
encountered  where  losses  were  frequent  due  to  poor 
material  management,  the  underlying  cause  was  directly 
traceable  to  an  illogical  or  to  an  ambiguous  delegation 
of  these  four  functions.  Too  often,  indeed,  they  were 
all  thrown  upon  the  shoulders  of  one  man :  the  purchas- 
ing agent. 

Administrative  Organization. — As  regards  the  adminis- 
trative subdivision  between  the  various  members  of 
material  personnel,  there  exists  considerable  difference 
of  opinion.  Accepting  the  concept  that  materials  in 
the  sense  in  which  we  use  the  word  exist  solely  for  the 
benefit  of  production,  it  would  be  logical  that  the  balance 
of  stores  (or  worked  material)  clerk,  the  receiving 
clerk,  and  the  storekeeper  should  all  be  under  Pro- 
duction. This  arrangement  is  not  at  all  universal, 
however,  probably  the  most  common  departure  being 
that  in  which  the  storekeeper  is  under  the  purchasing 
agent.  This  has  the  disadvantages  referred  to  pre- 
viously of  placing  a  department — the  store  room— 
which  vitally  affects  production,  under  a  man  whose 
primary  interest  lies  elsewhere,  an  arrangement  which 
at  times  has  led  to  serious  consequences. 

The  ideal  arrangement  both  for  purposes  of  safeguards 


ORGANIZATION 


33 


and  for  incentive  to  quick  and  accurate  action  would 
seem  to  be  to  have  the  storekeeper  directly  under  the 
works  manager  and  the  balance  clerk  directly  under  the 
production  superintendent  or  the  head  of  the  planning 
department.  Here  again  practice  differs,  for  instance 
the  balance  clerk  frequently  reports  to  the  head  of  the 
cost  department.  Since  the  average  cost  accountant 
does  not  ordinarily  appreciate  the  vital  relation  between 
manufacturing  efficiency  and  material  control,  such  an 
arrangement  again  almost  always  works  out  disadvan- 
tageously.  With  the  arrangement  suggested,  and  partic- 
ularly in  the  smaller  plants  with  the  receiving  clerk 
under  the  traffic  department,  which  may  in  most 
instances  report  to  the  works  manager,  informed  and 
energetic  action  as  well  as  ample  safeguards  against 
collusion  and  fraud  are  provided.  Clerical  errors, 
furthermore,  are  much  more  readily  caught  where  one 
department  is  working  against  another  in  this  respect. 
It  must  be  emphasized,  however,  that  these  relations 
must  vary  with  cases;  that  they  are  presented  only  as 
an  arrangement  which  has  been  put  in  effect  with  excellent 
results  in  several  different  types  of  plants  and  which 
probably  furnishes  maximum  checks  with  minimum  labor 
and  routine.  A  skeleton  organization  chart  of  this 
arrangement  of  the  material  personnel  would  therefore 
be  as  follows: 


1     GENERAL    MANAGER     | 

1 

1 

I 

Chief  Engineer 

WorksManager            ^Cng^ent. 

Sales  Manager 

1 

Raw  Material  Inspector 

1 

1                           1 

1 

Production  Supt 

P5S?3  [TrafficManagerj 

Storekeeper 

1 

1 

[Balance  Clerk] 

|   Packing"!    {  Shipping")     |  Raw   |     |  Worked 

|    Receiving 

FIG.   1. — Typical  organization  of  personnel  concerned  with  material  handling. 
3 


34  FACTORY  STORESKEEPING 

Physical  Location  of  Offices. — The  organization  chart, 
Fig.  1,  shows  one  arrangement  satisfactory  under  a  wide 
variety  of  conditions  of  the  administrative  relations 
between  persons  concerned  with  material  routine,  yet 
even  with  a  satisfactory  organization  it  is  always  neces- 
sary to  consider  in  addition  the  physical  location  of 
offices  so  that  as  a  whole  there  may  be  a  convenient 
working  relation  between  them.  The  layout  of  the  room 
room,  proper  is  dealt  with  in  Chap.  VIII,  but  since 
many  cases  of  faulty  work-relationship  have  come  to 
light  due  simply  to  an  improper  physical  location  of 
the  persons  themselves,  it  may  be  useful  to  indicate 
some  of  the  considerations  which  should  govern  the 
placing  of  these  various  functions. 

In  many  cases  the  location  for  any  specific  department 
will  be  self-evident;  for  instance  in  the  case  of  the  traffic 
department  or  at  least  that  part  of  it  which  receives  and 
ships  packages,  obviously  it  should  be  placed  immedi- 
ately contingent  to  the  railroad  tracks  and  trucking 
platforms.  This  is  both  for  the  incoming  and  outgoing 
shipments,  and  necessarily  the  packing  and  shipping 
department  should  be  immediately  adjacent  to  this  office, 
whether  or  not  these  departments  be  under  one  head. 

For  convenience  in  the  physical  handling  of  packages, 
as  well  as  for  the  transaction  of  the  necessary  paper 
routine,  the  receiving  department  should  also  be  immedi- 
ately adjacent  to  the  traffic  department.  Here  goods 
are  received  in  bulk  from  the  traffic,  unpacked,  checked 
with  the  copy  of  the  purchase  order  and  sent  to  the  store 
room.  They  should  pass  a  minimum  distance  from  one 
to  the  other. 

The  store  room,  therefore,  should  be  within  reasonable 
truck  or  elevator  distance  of  the  receiving  department. 
This  is  particularly  true  of  a  central  store  room,  and  of 
course  the  location  of  detached  departmental  or  subsidi- 
ary store  rooms  must  be  carefully  chosen  with  regard 
to  delivery  of  incoming  and  outgoing  goods. 


LOCATION  OF  DEPARTMENTS  35 

Many  cases  have  been  encountered  of  faulty  operation 
of  the  balance  of  stores  function  due  simply  to  the  loca- 
tion of  the  balance  sheets  relative  to  the  other  depart- 
ments with  which  the  balance  clerks  deal.  I  con- 
sidered it  absolutely  fundamental  for  effectiveness  that 
the  administrative  authority  for  balance  sheets  be 
centered  in  a  production  official.  Whoever  be  intrusted 
with  the  supervision,  however,  there  is  but  one  logical 
location  for  the  material  balance  sheets  themselves  :— 
immediately  next  to  the  planning  manager's  elbow  or 
whoever  the  official  may  be  whose  duty  it  is  to  look 
ahead  and  plan  production  and  material  needs.  He  is 
the  one  who  has  constantly  to  put  future  requirements 
for  production  against  the  amount  of  material  on  hand, 
on  order,  and  assigned,  and  his  work  is  very  much 
handicapped  unless  balance  sheets  are  instantly  accessible. 
This  would  seem  almost  axiomatic,  and  yet  numerous 
cases  have  been  encountered  in  which  there  was  a  great 
deal  of  lost  motion  on  the  part  of  the  production  manager 
in  sending  or  phoning  to  another  department  for  informa- 
tion about  material — information  which  should  have 
been  right  under  his  thumb.  The  balance  sheets, 
moreover,  should  not  be  too  far  from  the  store 
room,  even  where  adequate  automatic  carriers  are  pro- 
vided. There  is  much  work  in  connection  with  stores 
handling  and  checking  which  cannot  be  done  either  by 
the  regular  factory  mail  system,  by  telephone,  or  by 
pneumatic  tube  service,  but  must  actually  be  done  in 
consultation  between  the  storekeeper  and  the  balance 
clerk.  These  and  similar  considerations  point  to  the 
conclusion  that  the  planning  or  production  office  should 
be  situated  just  as  close  to  the  manufacturing  depart- 
ments and  as  centrally  located  relative  to  them  as  is  pos- 
sible. Follow-up  will  thereby  be  made  not  only  easier 
but  also  much  surer  and  more  systematic. 

For  similar  reasons  the  cost  department  (as  distinct 
from  the  general  accounting  department)  should  be  not 


36  FACTORY  STORESKEEPING 

only  under  the  supervision  of  the  works  manager  or  the 
production  superintendent  but  should  be  physically 
located  close  to  the  manufacturing  department,  and 
therefore  close  to  the  balance  sheets.  No  matter  how 
smooth  a  working  system  we  may  have,  there  are  always 
innumerable  questions  which  arise  in  regard  to  the 
correctness  of  time  or  job  tickets,  stores  or  worked 
material  issues  and  credits,  inspection  slips  and  numer- 
ous other  sources  of  information  which  have  to  be 
adjusted  in  consultation  between  the  storekeeper,  the 
balance  clerk,  the  cost  clerk,  and  the  foreman.  Here 
again,  any  sort  of  .communicating  service  will  serve  only 
for  a  portion  of  the  adjustments — ordinarily  they  must 
be  made  in  person.  When  one  has  but  to  step  out  of  his 
door  as  it  were,  to  adjust  some  small  matter,  he  is  very 
much  more  likely  to  do  so,  and  certainly  can  be  much  more 
readily  held  to  account  for  not  doing  so,  than  would  be 
the  case  where  this  adjustment  necessitated  a  long  trip. 

The  general  accounting  offices,  on  the  other  hand, 
may  be  located  wherever  convenient,  and  it  is  somewhat 
customary  to  find  them  in  a  large  city  many  miles 
distant  from  the  factory  itself.  There  is  no  direct 
connection  between  general  accounting  and  the  shop,  and 
most  of  the  means  by  \\rhich  costs  are  tied  into  the 
general  accounts  through  reports  of  the  cost  office  to 
the  general  accounting  office  and  back  again,  should  be 
worked  up  in  the  form  of  exhibits  for  the  guidance  of 
administrative  officers  anyhow,  so  that  the  general 
accounting  offices  may  be  located  wherever  desirable 
without  great  inconvenience. 

The  location  of  the  purchasing  agent's  office  similarly 
may  be  wherever  desired,  although  ordinarily  this 
should  be  much  closer  to  the  works  than  is  the  case  with 
the  general  accounting  office,  because  of  the  constant 
necessity  of-  consultation  and  the  constant  passage  of 
papers  between  the  purchasing  agent  and  numerous 
other  officials  of  the  plant. 


LOCATION  OF  DEPARTMENTS  37 

It  will  be  understood  that  the  above  considerations 
apply  to  the  plant  of  medium  size.  With  increasing 
size,  the  problem  of  securing  a  balanced  arrangement 
between  various  departments  becomes  increasingly  diffi- 
cult until  in  a  plant  of  very  large  size  decentralization 
becomes  desirable.  We  then  get  back  in  considering 
individual  units  to  the  problems  of  the  moderate  sized 
plant  just  discussed.  In  every  case,  however,  adminis- 
trative relationships  and  the  physical  layout  must  be 
arranged  so  as  to  secure  the  greatest  serviceability 
between  related  departments. 


CHAPTER  IV 
THE  BASES  OF  MATERIAL  REPLENISHMENT 

SUMMARY:  The  Market  as  a  Basis. — Production  Requirements  as  a 
Basis. — Regulation  through  Amounts  on  Hand. — Regulation  through 
Amounts  Available.  Requirements  of  Balance  Sheet.  Installation  of 
Balance  Sheet;  Determining  Limits.  Replenishment  Orders. — Regulation 
through  Schedule. 

There  are  two  bases,  other  than  the  whims  of  the 
purchasing  agent,  upon  which  the  routine  for  replenishing 
materials  rests :  I.  the  market ;  II.  production  requirements. 

I.  The  Market. — For  those  manufacturers  who  deem 
it  wise   to   govern   the  purchase   of  materials  by   the 
market,  little  discussion  will  be  given,  since  such  opera- 
tions fall  within  the  realm  of  merchandising  with  which  I 
am  not  concerned.     As  indicated  previously,  I  am  con- 
vinced  from   experience   that   the   business   of   buying 
and  selling  materials  in  the  raw  form  with  a  view  to 
profit  is  no  part  of  the  manufacturer's  business  and 
should  be  engaged  in  only  after  very  thorough  considera- 
tion of  each  transaction.     I  xdo  not  refer  in  this  to  those 
industries,    such   as   the    textile,    where  speculative   or 
anticipatory  purchasing  is  inherent  in  the  business,  but 
only  to  speculative  buying  as  an  end  in  itself  and  for 
its  own  sake.     It  is,  of  course,  true  that  some  manu- 
facturers have  made  large  amounts  of  money  on  the 
side,  as  it  were,  by  speculative  purchasing  and  re-sale 
on  a  rising  market  particularly  during  the  continuous 
rise  in  prices  following  the  war.     It  is  equally  true, 
however,   that  fortunes  have  been  similarly  lost,   and 
conditions  during  the  war  are  no  criterion  for  the  govern- 
ment of  current  production. 

II.  Production    Requirements. — For    the    replenish- 
ment of  supplies  according  to  production  needs,  certain 

38 


MATERIAL  REPLENISHMENT  39 

definite  and  convenient  working  rules  may  be  laid  down 
among  which,  incidentally,  is  that  concerning  the  state 
of  the  market.  In  this  case,  however,  so  far  from  the 
market's  being  a  governing  consideration,  it  is  but  one 
of  a  number  of  factors  which  must  be  taken  into  account. 
As  will  be  pointed  out  in  the  next  topic,  there  are  several 
means  by  which  replenishment  may  be  controlled  for  the 
benefit  of  production.  In  all,  however,  the  aim  is  to 
have  on  hand  just  sufficient  materials  of  the  right  kind 
actually  needed  at  a  particular  time  for  a  particular 
purpose,  no  more  and  no  less.  Considering  the  cost 
of  the  articles  themselves,  and  the  cost  of  the  work 
involved  in  handling  them,  there  should,  in  other  words, 
be  a  constant  flow  of  supplies  to  the  point  of  use,  with  a 
minimum  but  always  sufficient  reservoir  as  a  safeguard. 
To  accomplish  this  purpose  storage  is  of  course  usually 
necessary. 

There  are  three  broad  kinds  of  production  which  give 
rise  to  three  corresponding  types  of  material  replenish- 
ment problem.  The  first  arises  in  plants  which  run 
along  continuously  on  an  even  keel  for  long  periods  at  a 
predetermined  rate  of  production.  In  this  case,  as 
illustrated  by  the  sugar  mill  for  instance,  material 
needs  are  known  and  the  rate  of  use  remains  constant 
throughout  the  run.  The  second  arises  in  plants  which 
move  up  and  down  in  production  with  actual  orders 
received  from  time  to  time.  In  this  case,  under  which 
the  great  majority  of  our  plants  fall,  as  illustrated  by  the 
average  machine  shop  or  other  plant  which  manufactures 
partly  to  stock  and  partly  to  order,  material  needs 
cannot  be  known  accurately  before  the  order  is  received, 
but  on  the  other  hand,  delivery  cannot  always  await  the 
purchase  of  parts  specially  for  each  order.  The  problem 
then  is  to  keep  inventory  as  low  as  is  consistent  with 
quick  delivery.  The  third  kind  of  production  arises 
in  plants  which  are  not  so  fortunate  as  the  first  nor  so 
unfortunate  as  the  second,  but  which  may  set  definite 


40  FACTORY  STORESKEEPING 

schedules  for  production  of  specific  lines  during  given 
periods,  this  schedule  being  of  course  subject  to  change 
but  resulting  in  a  revised  schedule  as  definite  as  the 
first.  In  this  case,  illustrated  by  the  shoe  factory  or  the 
specialty  contract  shop,  material  needs  may  be  foreseen 
with  definiteness  equal  to  the  schedule. 

Each  of  the  problems  in  material  replenishment 
imposes  its  own  particular  mechanism,  for  it  would  be 
poor  business  to  go  to  the  detail  in  records  and  routine 
necessary  in  the  second  case,  when  in  reality  our  problem 
deals  only  with  the  first  and  simplest  case.  Resulting 
from  these  three  kinds  of  problems,  we  get  three  distinct 
plans  by  which  material  replenishment  may  be  governed : 

Plan  A. — The  ordering  of  materials  governed  by  the 
amount  on  hand  in  the  store  bins.  This  ordinarily 
presupposes  a  constant  rate  of  use  with  the  determination 
of  a  " minimum"  amount,  which  when  reached  in  the 
bin,  dictates  the  issuance  of  a  replenishment  order,  and 
which  is  supposed  to  serve  all  needs  up  until  the  new  order 
is  recieved. 

Plan  B, — The  ordering  of  materials  governed  by  a 
book  balance  -available  obtained  .through  keeping  a 
minimum  reservoir  of  materials  on  hand  and  looking 
ahead  and  apportioning  on  the  books  materials  to  known 
production  or  other  needs.  This  provides  a  safeguard 
where  the  rate  of  use  fluctuates,  since  replenishment 
orders  are  governed  by  a  so-called  "low  limit"  which  is 
set  and  used  so  as  to  dictate  the  issuance  of  a  replenish- 
ment order  according  to  actual  future  needs,  whether 
these  be  more  or  less  than  past  averages. 

Plan  C. — The  ordering  of  material  governed  by  a 
schedule  of  anticipated  production  worked  out  for  a 
period  as  far  in  advance  as  possible.  This  presupposes 
a  known  production  during  a  given  period,  such  as  that 
of  the  shoe  factory  or  the  plant  manufacturing  entirely 
to  stock. 

The  plant  ^is  fortunate  which  can  work  under  Plan  A 


MATERIAL  REPLENISHMENT  41 

or  Plan  C,  since  in  these  cases  material  requirements  are 
definite,  and  lend  themselves  to  a  comparatively  simple 
routine.  There  is  nothing  more  fatal,  however,  than  to 
fool  ourselves  into  believing  that  we  may  operate  under 
Plan  A  or  C  when  as  a  matter  of  fact  our  requirements 
do  not  lend  themselves  to  quite  such  automatic  regula- 
tion. This  mistake  is  particularly  common  as  regards 
Plan  A,  and  to  the  writer's  knowledge  many  serious 
losses  have  occurred  through  reliance  on  this  simple 
system  when  a  more  complicated  one  was  needed.  This 
point,  as  well  as  a  consideration  of  the  other  plans,  will 
be  brought  out  in  the  following  topics.  It  frequently 
happens  of  course  that  more  than  one  of  these  plans 
may  be  needed  in  any  one  factory — raw  materials  may 
require  Plan  B,  while  stationary  and  supplies  can  be 
handled  through  Plan  A. 

Plan  A .  Governing  Replenishment  by  Amount  on  Hand.— 
A  case  occurred  in  one  factory  where  after  considerable 
statistical  study  it  was  found  that  the  average  rate  of 
use  during  the  past  year  for  a  certain  item  was  300  pieces 
per  month.  It  took  on  the  average  1  month  to  renew 
the  supply.  Adding  33  per  cent  for  safety,  they  obtained 
a  " minimum"  of  400  below  which  the  supply  in  the  bin 
should  not  fall  without  the  issuance  of  a  replenishment 
order  for  an  amount  necessary  to  bring  balance  on  hand 
up  to  a  " maximum."  This,  the  manager  thought,  was 
being  extremely  conservative,  as  indeed  it  was  for  the 
ninety-nine  cases.  The  one-hundredth  case  caused  a 
serious  loss,  however,  when  requirements  rose  during  a 
given  month  to  450,  when  only  400  had  been  ordered 
upon  reaching  the  minimum. 

The  same  sort  of  thing  occurred  in  a  neighboring  plant 
when  a  succession  of  orders  was  received  calling  for  the 
same  material.  Upon  receipt  of  each  order,  an  inspec- 
tion of  the  bin  showed  that  sufficient  materials  were  on 
hand  to  supply  it.  This  information  was  obtained  at 
different  times  by  different  persons,  and  no  record 


42  FACTORY  STORESKEEPING 

of  each  of  their  needs  was  made,  since  none  was  provided 
for.  As  a  matter  of  fact,  there  was  sufficient  material 
on  hand  for  only  the  first  three  orders,  the  remaining 
customers  being  required  to  wait  until  the  shortage  was 
made  good. 

These  occurrences  do  not  prove  that  this  is  not  a  per- 
fectly good  plan  of  re-ordering  material  provided  condi- 
tions are  such  as  to  make  its  use  effective.  It  does 
indicate,  however,  that  it  is  effective  only  under  condi- 
tions where  the  rate  of  use  is  reasonably  constant.  For 
instance,  this  method  is  satisfactory  in  the  case  of  most 
factory  supplies.  Where  the  rate  of  use  is  not  constant, 
this  method  can  be  made  effective  only  through  the 
expensive  alternatives  of  making  the  minimum  limit 
high  enough  to  cover  all  exceptional  demands  when  for 
10  months  out  of  the  year  a  much  less  supply  on  hand 
might  be  adequate,  or  through  eternal  vigilance  in  the 
revision  of  minimum  limits — a  vigilance  impossible  of 
fulfilment  where  any  considerable  variety  is  stocked 
or  where  changes  in  rate  of  use  are  frequent.  On  the 
other  hand,  if  the  minimum  is  based  on  the  10  months' 
average,  it  is  almost  impossible  to  guard  against  such 
shortages. 

In  addition,  in  considering  the  inappropriateness  of 
Plan  A  where  rate  of  use  is  not  constant,  it  must  be 
remembered  that  this  " minimum"  on  the  balance  sheet 
or  a  red  rag  or  other  marking  of  the  minimum  in  the 
bin  which  dictates  issuance  of  replenishment  order, 
results  in  ordering  a  new  supply  of  the  particular  item 
whether  it  is  actually  needed  in  the  future  or  not. 
Plan  B,  on  the  other  hand,  reorders  only  according  to 
actual  seen  or  foreseen  needs. 

Plan  B.  Governing  Supply  by  Amount  Available.— 
Where  the  rate  of  use  fluctuates  or  where  future  needs 
cannot  be  foretold  for  a  considerable  period,  Plan  B,  or 
that  of  re-ordering  materials  by  the  book  balance  avail- 
able after  all  known  needs  are  provided  for  instead  of  the 


MATERIAL  REPLENISHMENT  43 

actual  amount  in  the  bin,  should  be  used.  This  is  by  far 
the  most  complicated  method  and  yet  nine  times  out  of 
ten  it  is  the  method  needed  in  the  average  factory  for  all 
major  supplies,  and  is  the  simplest  one  which  can  ade- 
quately safeguard  supply  and  yet  keep  the  reserves  to  a 
minimum.  The  only  other  sure  method  in  this  case, 
which  is  a  cumbersome  and  expensive  one,  is  a  physical 
apportionment — a  physical  setting  aside  of  material  as 
needs  become  known.  The  detailed  operation  of  such  a 
balance  sheet  will  be  given  in  the  next  chapter,  only  the 
general  basis  of  its  operation  being  outlined  here. 

Such  operation  implies,  of  course,  that  we  shall  have  an 
accurate,  up-to-date  record  or  balance  sheet  for  each 
item  of  material  we  carry.  The  balance  sheet  under  this 
plan  is  the  governor  and  safety-valve  combined  for  the 
whole  material  routine.  Out  of  experience,  the  follow- 
ing list  of  factors  for  such  a  balance  sheet  has  grown : 

Each  balance  sheet  for  each  item  must  show: 

1.  Material  outstanding  on  purchase  orders. 

2.  Material  now  on  hand  in  the  store  room. 

3. .Material  apportioned,  reserved,  or  scheduled  to 
manufacturing  orders  now  in  our  hands  but  not 
yet  in  process,  or  for  other  purposes. 

4.  Material  available  for  apportionment  to  future  needs. 

5.  A  current  measurement  of  successive  requirements 

against  amounts  still  available. 

6.  A  predetermined  but  flexible  Low  Limit  below  which 

the  amount  available  for  apportionment  shall  not 
fall  before  a  replenishment  order  is  issued.  This 
figure  is  based  on: 

(a)  Probable  rate  of  use  during  time  necessary 

to  renew. 

(b)  Time  necessary  to  renew. 

(c)  Allowance  for  safety,  considering  the  impor- 

tance of  the  article  to  the  business. 

(d)  How    far    the    planning  department  may 

work  ahead  of  the  shop. 


44  FACTORY  STORESKEEPING 

7.  A  predetermined  but  flexible  Amount  to  Order  when 
the  low  limit  is  reached.     This  figure  is  based  on : 

(a)  The    low    limit    as    above.     Making    the 

amount  to  order  equal  to  the  low  limit 
would  require  another  replenishment 
order  immediately  it  is  received.  This 
would  ordinarily  cause  unnecessary  addi- 
tional labor,  so  that  the  following  tend  to 
raise  the  amount. 

(b)  How  often  it  is  desirable  to  issue  orders  for 

it. 

(c)  The  present  price. 

(d)  The  probable  future  price  movement. 

(e)  Economical  unit  of  purchase. 

(/)  The  space  available  for  storage,  or  the  cost 

of  rented  space. 
(g)  The  money  available  or  expedient  for  the 

investment. 
(h)  The  probable  depreciation  or  obsolescence 

of  the  item. 
(i)  Necessity    of    curing    or    aging    different 

materials. 

Without  becoming  involved  in  detail  at  this  point,  it 
may  be  explained  that  the  basis  upon  which  the  opera- 
tion of  such  a  balance  sheet  is  built  up,  is  that  through 
a  proper  setting  of  the  low  limit,  together  with  the 
advanced  apportionment  of  material  to  orders,  the 
quantity  called  for  on  a  replenishment  order  may  be 
considered  as  being  available  for  apportionment  (not 
issue)  the  moment  the  replenishment  order  is  written. 
All  amounts  outstanding  on  purchase  orders  are  there- 
fore considered  thus  available.  Materials  on  hand  in 
the  store  room  also  form  a  part  of  this  available 
reservoir. 

For  the  operation  of  the  sheet,  we  therefore  get  the 
amount  on  order,  add  to  it  the  amount  on  hand  in  the 
store  room  and  subtract  from  this  sum  the  requirements 


MATERIAL  REPLENISHMENT  45 

of  manufacturing  or  other  orders  in  our  hands.  The 
difference  then  becomes  the  amount  available  for  appor- 
tionment to  future  orders. 

This  apportionment  is  exactly  similar  to  reserving 
or  setting  aside  in  advance  from  next  month's  salary 
check  a  sufficient  amount  of  money  to  meet  an  insurance 
bill  which  we  know  will  be  due.  The  balance  of  the 
check  plus  what  we  may  already  have  unassigned  at 
the  time,  will  then  be  available  for  other  uses. 

By  setting  aside  on  the  sheet  or  apportioning  the  needs 
of  an  order  in  advance,  and  obtaining  an  amount  avail- 
able which  includes  both  the  amount  in  the  store  room 
and  the  amount  on  order,  we  are  thus  not  only  working 
ahead  of  actual  issue  requirements  during  a  period  which 
theoretically  is  covered  as  regards  issue  in  the  setting  of 
the  low  limit,  but  also  by  working  definitely  to  known 
needs  we  are  keeping  the  amount  of  inventory  to  the 
lowest  possible  point  consistent  with  safety.  The  word 
"  theoretically  "  is  used  in  the  last  sentence,  as  even  under 
such  a  method,  it  is  of  course  not  impossible  to  have  a 
shortage  of  material,  and  the  further  we  can  look  ahead 
the  less  danger  there  is  of  shortage.  If  a  strict  follow-up 
as  regards  traffic  conditions  and  sources  of  supply  and 
other  related  items  is  maintained,  however,  shortages 
under  such  a  method  of  operation  become  exceedingly 
rare,  and  with  a  proper  tickler  system  for  following  a 
purchase  order,  as  will  be  explained,  supplemented  by 
frequent  inventory  checks  and  current  measurement  of 
amounts  on  hand  (col.  2)  against  amounts  apportioned 
(col.  3)  such  shortages  may  always  be  known  several 
days  in  advance  of  the  time  materials  will  actually  be 
needed. 

Steps  in  Initiation  of  Plan  B. — How  is  such  a  control 
set  up  and  maintained,  and  how  are  replenishments 
governed  by  it?  The  steps  are  as  follows: 

1.  The  engineering  department  must  furnish  specifi- 
cations for  all  articles  to  be  purchased.  Responsibility 


46 


FACTORY  STORESKEEPING 


c^ 


II 


«5  to 

»?£ 


X 
CO 


O   5EJ: 


or 

UJ 


I 


14- 


MATERIAL  REPLENISHMENT  47 

for  quality,  in  general,  should  be  centered  in  the  engi- 
neering or  other  technical  department;  evejy  item  and 
every  requirement  should  be  systematically  scrutinized 
and,  after  consultation  with  interested  persons,  useless 
varieties  discarded. 

2.  After  standardizing  what -is  to  be  carried  in  stock 
the  second  step  is  to  secure  all  information  about  each 
article,  including  the  consumption  in  the  past,  the  prob- 
able future  consumption,  the  kind  and  size  of  containers, 
the    most    economical    amount    to    buy,    and    similar 
information. 

3.  From  the  purchasing  agent  and  the  traffic  depart- 
ment working  in  conjunction  secure  in  writing  the  time 
necessary  to  renew  the  supply  from  the  receipt  of  the 
replenishment  order  in  the  purchasing  department  to  the 
delivery  of  the   goods   at   the  factory   door,   including 
necessary  time  for  securing  bids,  settling  the  conditions 
of  sale,  drawing  up  the  contract,  necessary  purchasing 
office  clerical  work,  and  so  on. 

4.  To  this  time  add  the  necessary  time  for  the  clerical 
work  in  the  production  department,  between  the  knowl- 
edge of  what  is  wanted  and  the  arrival  of  the  replenish- 
ment order  in  the  purchasing  department;  also  the  time 
for  receiving,  unpacking,  inspecting,  and  delivering  to 
stores  or  to  the  shop  upon  receipt  of  shipment. 

5.  Determine   percentage  for  safety.     This  per  cent 
will  naturally  vary  with  conditions  of  the  market  and 
of  transportation,  and  also  with  the  accuracy  of  estimates 
on  the  above  items.     Ordinarily,  from  15  to  25  per  cent 
margin  on  consumption  during  time  to  renew  is  ample, 
although  during  times  of  emergency  these  figures  may  have 
to  be  doubled  or  even  quadrupled,  and  in  any  event 
constant  vigilance  and  much  judgment  is  necessary  in 
regulating  these  allowances. 

The  form,  Fig.  2,  has  been  found  extremely  useful  in 
listing  and  classifying  these  various  sorts  of  information. 

6.  Set  low  limit.     For  instance: 


48  FACTORY  STORESKEEPING 

Suppose  the  total  time  necessary  to 

renew  supply  be 3  weeks 

And  probable  consumption  per  week  300  units 

Then  consumption  during  time  to  re- 
new: 300  X  3 .  .  ...  . -..: .'. .  900  units 

Allowance  for  safety,  say  10  per  cent.  90  units 

Low  Limit 990  or  1,000  units 

If  we  are  planning  say  9  weeks  ahead  of  the  shop  (3  X 
time  to  renew)  we  are  approaching  conditions  applicable  to 
Plan  C  described  below,  but  if  we  are  planning  from  hand 
to  mouth,  the  low  limit  in  this  case  would  be  accordingly 
raised. 

7.  Set  amount  to  order: 

Using  the  illustration  in  the  last  topic,  it  will  require 
approximately  1,000  units  (allowing  10  per  cent  for 
contingencies)  to  serve  production  during  the  time  the 
purchase  order  is  outstanding — 3  weeks.  Thus  if  we 
had  1,000  units  in  the  bin  when  the  purchase  order  is 
issued,  these  would  normally  be  exhausted  just  after 
the  new  shipment  were  received.  Had  we  ordered  only 
1,000,  or  only  a  3  weeks'  supply,  since  it  takes  3  weeks 
to  renew,  we  should  immediately  upon  receipt  be  forced 
to  issue  a  new  purchase  order.  Following  this  procedure 
it  would  mean  that  a  purchase  order  would  have  to  be 
issued  approximately  every  3  weeks.  Cut  the  amount 
in  half  or  to  500  units  and  a  purchase  order  would  corres- 
pondingly have  to  be  issued  every  10  days,  arid  so  on. 

The  amount  to  order,  therefore,  affects  directly  the 
frequency  of  issue  of  purchase  orders,  or  looking  at  it 
the  other  way,  the  frequency  with  which  we  wish  to 
issue  purchase  orders  is  of  course  one  of  the  factors  to  be 
considered  in  setting  amounts  to  order.  On  page  44 
are  listed  various  other  considerations  in  determining 
how  much  we  should  buy  when  we  do  buy.  For  instance, 
trade  custom  may  make  advantageous  or  even  necessary 
the  purchase  of  the  article  in  10  gross  lots,  so  that  in 


MATERIAL  REPLENISHMENT 


49 


this  case  instead  of  1,000  the  " amount  to  order"  would 
be  1,440  and  we  would  purchase  this  quantity  at  one  time. 
Considerations  regarding  any  one  of  these  factors  may 
similarly  affect  the  answer  and  nothing  would  be  gained 
by  following  the  method  further  here  since  in  each  case 
it  is  a  matter  to  be  determined  in  consultation  between 
those  who  may  be  entitled  to  a  judgment  in  this  matter. 
8.  Enter  on  the  balance  sheet  all  information  called 
for  as  explained  in  detail  in  the  next  chapter. 


REQUISITION 

LEWIS  MANUFACTURING  CO. 


No  1597 


DEPARTMENT. 


TO  THE  PURCHASING  AGENT 

PLEASE  ORDER  THE  FOLLOWING  MATERIAL- 


CUARGE  WANTED;  P.O.Nu.          ORDER  FROM 


DATE  ORDERED 


PURCHASE  ORDER 
WRJTTEA  EY 


PURCHASING  AGENT 


FIG.  3. — Replenishment    order,    for    requesting    purchasing    agent    to    buy 

materials. 

We  are  now  prepared  to  establish  accurate  regulation 
of  replenishment.  It  should  be  unnecessary  to  state 
that  these  measures  in  themselves  will  not  give  control. 
Accurate  control  of  material  or  in  fact  of  any  work  in  a 
factory  depends  upon  many  features  and  upon  the 
cooperation  of  many  persons.  In  many  cases,  for 
instance,  the  first  thing  to  do  is  to  block  out  a  more 
definite  or  logical  division  of  authority  and  responsi- 
bility, or  to  lay  out  and  rearrange  the  whole  physical 
store  room  or  other  departments  (see  Chap.  Ill  and 
VIII).  New  forms  may  have  to  be  drawn  up  and  new 
procedure  established.  All  of  such  auxiliary  measures 
are  here  taken  for  granted  because  of  the  unfortunate 


50  FACTORY  STORESKEEPING 

necessity  of  discussing  one  thing  at  a  time.  To  continue 
the  story  at  this  point,  it  is  necessary  only  to  recall  that 
when  the  low  limit  is  reached,  a  replenishment  order, 
Fig.  3,  for  the  predetermined  amount  is  sent  to  the  pur- 
chasing agent  via  the  proper  official  for  approval. 
This  replenishment  order  must  provide  for: 

1.  The  serial  number.     This  is  for  purpose  of  identifi- 
cation of  the  replenishment  order  itself,  and  for  entry  on 
the  purchase  order  and  other  records  of  the  transaction. 

2.  The  point  of  origin  of  the  order,  or  the  department 
or  person  who  makes  the  request  to  purchase. 

3.  The  date  of  issue  of  the  replenishment  order. 

4.  For  what  use  the  articles  are  desired,  whether  to 
replenish    stock    or    for    some    other    specific    purpose. 

5.  The  symbol  or  other  short  designation  of  article 
required. 

6.  The  quantity,  size,  weight,  length  or  other  dimen- 
sions as  per  the  balance  sheet,  amount  to  order,  and  the 
specifications. 

7.  Concise   but   accurate   description   with   reference 
to  the  specifications. 

8.  When    wanted;    this    is    particularly    important. 
The  follow-up  routine  of  the  purchasing  agent  is  based 
on  this  date,  and  it  is  of  course  unreasonable  to  expect 
him  to  give  discriminating  attention  to  orders  unless  he 
be  informed  of  relative  needs.     As  explained  previously, 
this  time  must  allow  the  purchasing  agent  ample  oppor- 
tunity for  all  of  the  operations  which  have  to  be  performed 
in  this  office. 

9.  A  place  for  entering  the  purchase  order  number 
when  this  is  issued. 

10.  Preferably  a  space  for  a  suggestion  on  the  part  of 
the  maker  of  the  replenishment  order  as  to  where  the 
article  may  best  be  purchased.     It  must  be  understood, 
of  course,  that  the  purchasing  agent  is  bound  in  no  man- 
ner whatever  to  follow  this  advice,  since  otherwise  it 
would  not  only  be  usurping  the  function  of  the  purchasing 


MATERIAL  REPLENISHMENT  51 

agent  but  would  also  open  the  way  for  undue  discrimina- 
tion or  pave  the  way  for  collusion  between  vendors  and 
various  persons  within  the  plant.  Its  use  is  usually 
confined  to  special  or  unclassified  articles  which  may 
have  to  be  made  to  order  or  which  may  be  manufactured 
and  obtainable  from  only  one  firm — facts  which  the 
requisitioner  is  often  in  a  position  to  furnish  the  purchas- 
ing office. 

11.  The  signature  of  the  requisitioner.     The  purchas- 
ing agent  should  have  a  list  of  all  persons  (ordinarily 
only  heads  of  departments)  within  the  plant  authorized 
to  sign  replenishment  orders.     No  replenishment  order 
should  be  honored  even  when  approved  by  a  higher 
authority,  unless  so  signed,  because  the  approving  office 
should  not  be  burdened  with  who  requests,  but  only  with 
what  and  how  much  is  requested. 

12.  The  approval  of  the  works  manager,  production 
manager,    or   other   official   entrusted   with   this   duty. 
This   may  seem  a  trivial  matter  to  throw  upon  the 
shoulders  of  the  works  manager,   and   of  course,   this 
particular  official  does  not  ordinarily  assume  this  duty  in 
the  larger  plants,  where  it  would  be  shifted  to  the  produc- 
tion superintendent,  or  to  the  head  material  man.     No 
procedure  will  work  of  itself,  however;  constant  super- 
vision is  necessary  to  insure  effective  results  and  this 
requirement  definitely  places  in  one  man,  whomever  he 
may  be,  the  responsibility  for  exercising  supervision  and 
using  his  judgment  in  regard  to  revision  of  the  various 
factors  affecting  low  limits  and  amounts  to  order  enumer- 
ated above. 

In  the  case  of  speculative  purchasing  the  decision 
should  ordinarily  rest  with  no  single  man,  but  should 
be  reached  in  conference  by  the  sales,  financial,  and 
production  officials. 

Any  change  in  traffic  or  other  conditions  affecting 
the  time  and  the  amount  in  which  an  article  should  be 
ordered  must  be  reported  to  the  man  held  responsible. 


52  FACTORY  STORESKEEPING 

He  is  also  responsible  for  stopping  replenishment  orders 
inconsistent  with  probable  future  production  require- 
ments, for  the  utilization  of  substitute  or  slow-moving 
articles  where  possible,  and  in  general  for  keeping  low 
limit  and  order  points  revised  up  to  date  in  accordance 
with  production  requirements.  Some  one  official, 
furthermore,  should  be  held  definitely  responsible,  and 
of  course  given  commensurate  authority,  for  the  upkeep 
of  the  whole  material  mechanism  and  these  details  may 
well  be  combined  in  one  man.  He  must  necessarily, 
therefore,  be  in  close  touch  with  production. 

The  replenishment  order  must  be  made  at  least  in 
duplicate,  the  original  going  to  the  purchasing  agent, 
the  duplicate  to  be  retained  by  the  requisitioner;  other 
copies  may  be  made  if  required.  Any  number  of  dis- 
similar items  may  be  entered  on  the  same  replenishment 
order  without  confusion  or  additional  work  in  the  pur- 
chasing office.  The  only  requirement  here  is  to  see 
that  forms  be  provided  with  the  necessary  cross-refer- 
ence spaces  between  replenishment  and  purchasing 
orders  and  that  these  cross  references  be  systematically 
made. 

Plan  C.  Schedule. — Little  need  be  said  in  regard  to  this 
method  of  controlling  replenishment,  for  if  future  require- 
ments for  production  may  be  definitely  determined, 
material  procedure  can  be  systematically  regulated 
accordingly.  The  whole  supply  may  be  contracted  for 
at  once  and  successive  shipments  thereafter  regulated 
through  Plans  A  or  B  on  the  balance  sheets  similar  to 
Figs.  4  or  5,  or  the  balance  sheet  described  under  Plan 
C  in  Chap.  V  and  illustrated  in  connection  with  Fig.  6, 
page  65,  may  be  used  in  order  to  govern  replenishment 
orders.  Another  alternative  is  to  keep  " Schedule" 
(Plan  C,  Fig.  6,  page  65)  in  the  front  office  ordering  from 
manufacturing  orders  released  from  there  as  per  this 
schedule. 


CHAPTER  V 
THE  MATERIAL  BALANCE  SHEETS 

SUMMARY  :  Choice  of  Balance  Sheet. — Sheet  for  Regulation  through  Amounts 
on  Hand. — Sheet  for  Regulation  through  Amounts  Available.  Information 
Necessary.  Procedure  to  Provide  this  Information. — Sheet  for  Regulation 
through  Schedule. — Worked  Material  Sheet. — Unclassified  Stores  Sheet. — 
Balance  Record  Files. 

Choice  of  Balance  Sheet. — The  material  balance 
records,  as  has  been  indicated,  form  the  heart  of  the 
supply  service  of  the  factory  through  which  material 
control  is  secured,  but  they  should  be  more  than  this, 
for  they  should  serve  both  production  and  accounting,  if 
properly  set  up  and  regulated,  in  furnishing  quick  and 
accurate  information  as  to  the  material  status  at  any 
time — information  of  increasing  value  and  reference  as 
the  business  expands. 

In  order  that  production  may  be  adequately  served,  it 
follows  that  the  balance  sheet  must  be  designed  and 
used  according  to  the  need  of  the  particular  type  of 
production  which  it  is  to  aid.  It.  would  be  just  as  much 
folly  to  accept  a  balance  sheet,  wished  upon  you  by  an 
accountant  simply  because  it  may  fit  into  his  pet 
accounting  scheme,  regardless  of  whether  or  not  it  was 
suitable  for  the  needs  of  the  production  manager,  as  it 
would  be  to  copy  your  neighbor's  shop  committee  system 
or  his  forms  and  production  plan.  On  the  other  hand, 
elaborate  forms  and  systems  have  been  painfully  worked 
up  to  meet  so-called  special  conditions  when  as  a  matter 
of  fact  there  was  nothing  very  special  about  them  and 
when  tested,  simpler  means,  modified  perhaps  with  an 
appreciation  of  underlying  principles  and  of  the  purposes 
to  be  served,  would  have  been  much  more  satisfactory 
iii  every  way. 

53 


54  FACTORY  STORESKEEPING 

Three  general  types  of  balance  of  stores  sheets  became 
necessary  to  meet  the  three  types  of  production  calling 
for  a  control  of  replenishment  under  one  of  the  Plans  A,  B, 
or  C,  outlined  in  the  preceding  chapter.  Each  of  these 
three  general  types  is  found  in  various  forms,  embodying 
different  arrangements  of  columns  designed  to  provide 
various  sorts  of  information.  No  attempt  will  be  made  to 
present  or  discuss  all  of  the  possible  or  existing  arrange- 
ments since  the  variety  is  infinite  and  the  particular 
typography  is  a  matter  largely  of  choice  and  of  compara- 
tively little  moment;  only  the  considerations  necessary 
to  the  effective  use  of  each  will  be  discussed,  illustrated 
by  one  example  of  each  type  of  sheet. 

Balance  Sheet  for  Plan  A. — Replenishment  Governed 
by  Amount  on  Hand  in  the  Store  Room. — This  is  the  sim- 
plest form  of  sheet  in  set-up  and  in  operation.  It  need 
provide  only  two  main  columns:  (1)  For  data  relating  to 
material  on  order,  providing  sub-columns  for  date  and 
number  of  requisition,  number  of  purchase  order,  amount 
received  and  amount  outstanding,  and  (2)  for  amount 
on  hand  in  the  store  room,  with  sub-columns  showing 
amounts  issued,  on  what  date  and  to  what  order  issues 
are  made,  total  value  and  value  per  unit.  If  the  opera- 
tion of  the  balance  sheet  presented  and  described  under 
Plan  B  be  thoroughly  understood,  the  operation  of  this 
simpler  sheet  illustrated  by  Fig.  4  will  need  no  explana- 
tion; no  further  description  will  therefore  be  given. 

It  must  be  emphasized  again  that  such  a  method  of 
regulating  material  has  limited  applicability.  It  is 
entirely  safe  only  when  the  average  rate  of  use  employed 
in  ascertaining  the  minimum  stock  to  be  kept  on  hand  is 
the  actual  rate  of  use  throughout  the  year ;  in  other  words, 
where  there  is  an  entirely  uniform  rate  or  flow  of  materi- 
als. Such  a  balance  sheet  must  not  be  expected  to  prove 
satisfactory  under  conditions  for  which  it  is  not  fitted. 

Plan  B. — Replenishment  of  Material  Regulated  by 
Amount  Available. — The  balance  sheet  here  presented, 


THE  MATERIAL  BALANCE  SHEETS 


55 


56  FACTORY  STORESKEEPING 

Fig.  5  (page  61)  and  a  method  of  control  similar  to  that 
here  described  is  the  one  needed  for  major  materials  in  the 
overwhelming  majority  of  manufacturing  plants  since 
most  factories  have  a  fluctuating  rate  of  use.  It  has  been 
in  operation  in  many  plants  for  a  number  of  years,  has 
proved  entirely  satisfactory  under  conditions  to  which  it 
is  adapted,  and  its  use  is  rapidly  increasing.  In  the 
particular  form  here  presented  it  is  unnecessary  to  state 
that  the  sheet  is  not  suitable  as  it  is  for  all  manufacturing 
plantSj  although  it  has  proved  of  very  wide  applicability. 
Comparatively  slight  modifications  will  adapt  it  to 
almost  any  type  of  industry,  however,  and  I  know  of  cases 
where  it  has  been  installed  with  success  in  mercantile 
establishments.  The  only  situation  where  its  use  is 
unnecessary  is  when  we  have  conditions  described  in 
Plan  A,  and  sometimes  C — conditions  encountered  only 
in  special  continuous  types  of  production.  This  balance 
sheet  is,  moreover,  suitable  for  use  under  Plan  A,  since 
all  that  is  necessary  in  such  a  case  is  to  use  only  the  first 
two  columns ;  and,  as  illustrated  at  the  end  of  this  chapter, 
with  certain  additions  it  is  suitable  for  use  under 
Plan  C. 

Before  considering  the  details  of  this  particular  recom- 
mended sheet,  it  is  well  to  review  its  general  function 
in  material  regulation.  A  satisfactory  regulation  of 
materials  under  this  plan  of  operation  presupposes  the 
ability  to  answer  almost  immediately  the  following 
questions.  Such  information  may  and  should  be  em- 
bodied in  one  central  place,  the  balance  sheet.  For  each 
item— 

1.  How  much  has  been  ordered? 

2.  When  was  it  ordered? 

3.  The  replenishment  order  number? 

4.  The  purchase  order  number? 

5.  How  much  has  been  received,  and  when? 

6.  How  much  is  still  outstanding  on  purchase  order? 

7.  How  much  does  balance  sheet  show  is  now  in  the 


THE  MATERIAL  BALANCE  SHEETS  57 

bin,  and  how  does  this  compare  with  the  amount  actually 
in  the  bin? 

8.  What   has   been   issued,    and   for   what   purpose 
and  when  was  it  issued? 

9.  What  has  been  returned  as  credit,  and  what  order 
or   account   was  credited  and  when  with  amount  and 
value  of  return? 

10.  The  total  value  of  material  on  hand  (including 
transportation  charges  where  practicable). 

11.  The  unit  value  of  material  on  hand   (including 
transportation  charges  where  practicable). 

12.  What  has  been  apportioned  or  set  aside  for  manu- 
facturing or  other  needs? 

13.  When  was  it  so  apportioned? 

14.  For  what  purpose  is  it  apportioned? 

15.  How  much,  if  any,  has  already  been  issued  against 
this  reservation? 

16.  The  balance  still  on  apportionment? 

17.  How  much  is  still  available  for  apportionment  to 
other  orders? 

18.  When  did  it  become  so  available? 

Besides  furnishing  answers  to  these  questions,  the 
balance  sheet  must: 

(a)  be  easy  to  operate. 

(b)  be  up  to  the  minute  in  record  of  transactions. 

(c)  provide  an  easy  means  of  tracing  each  transaction. 

(d)  enable   compilation   of  statistics  covering  rate  of 
use,  time  necessary  to  renew  supply,  cost,  and  other 
information. 

(e)  provide  a  means  for  checking  clerical  accuracy 
of  entry  and  balances. 

In  order  that  answers  to  these  questions  may  be 
instantly  available,  around  the  balance  sheet  must 
revolve  the  following  procedure :  The  topics  are  numbered 
to  correspond  with  and  answer  the  preceding  list  of 
questions : 

1 , 2  and  3.  Replenishment  orders  must  be  originated  by  or 


58  FACTORY  STORESKEEPING 

pass  through  the  balance  clerk  for  entry.  Besides 
showing  the  amount  ordered,  on  the  sheet  must  also  be 
noted  the  date  replenishment  order  is  issued  and  the 
replenishment  order  number  for  identification. 

4.  Upon  issuance  of  the  purchase  order,  a  copy  must 
be  sent  to  the  balance  clerk  showing  amount  actually 
ordered;  this  must  be  checked  with  the  amount  ordered 
as  per  the  replenishment  order,  and  any  necessary  adjust- 
ments made,  the  purchase  order  number  must  also  be 
entered  for  identification. 

5.  Upon   receipt   of   a   shipment,    a    notification    of 
materials  received  must  be  sent  to  the  balance  sheet. 
This  must  be  identified  with  the  purchase  order,  and 
must  show  the  amount  actually  received,  and,  if  conven- 
ient, also  the  amount  passed  and  the  amount  rejected 
upon    inspection,    although    this    information    may    be 
sent  forward  later.     It  is  important  that  the  notification 
of  materials  received  go  forward  just  as  promptly  as 
possible  after  the  shipment  is  in    since  requests  for  the 
issuance  of  material  not  on  hand  lodge  with  the  balance 
clerk  until  they  may  be  filled. 

6.  Notification  of   cancellation  of  purchase  orders  or 
of  parts  of  purchase  orders  so  that  in  conjunction  with 
notation  of  orders  and  of  receipts  a  running  balance  of 
amounts  still  due  may  be  kept. 

7.  Stock   count:   The  result   of   an    actual   physical 
count  by  the  store  keeper  or  his  representative  for  the 
item,  made  entirely  independently  of  any  knowledge  of 
balance  as  shown  on  the  balance  sheet  for  that  item. 
This  is  one  of  the  means  by  which  accuracy  of  the  perpet- 
ual  inventory   may   be   maintained,    and    such    count 
may  be  made  on  a  few  items  daily  so  that  in  the  course  of 
at  least  four  or  five  months  the  whole  store  room  may  be 
covered,  when  the  process  is  repeated,  or  the  same  object 
may  be  accomplished  in  one  of  the  other  ways  discussed 
under  INVENTORIES,  Chap.  X. 

8.  Stores   and  worked  material   issues  which  have 


THE  MATERIAL  BALANCE  SHEETS  59 

been  filled,  showing  amount  actually  taken  from  the 
store  room  and  issued  to  the  shop  or  other  department. 
These  may  show  also,  if  desirable,  the  remaining  balance 
in  the  bin  after  such  issues  have  been  subtracted  as  an 
additional  current  check  on  inventory. 

9.  Stores  and  worked  material  credits  showing  the 
amount  of  goods  actually  returned  to  the  store  room  as  a 
credit  to  some  previously  debited  charge  account. 

10  and  11.  Original  or  duplicate  invoice,  showing 
purchase  price  of  the  goods. 

Record  of  express  or  freight,  or  other  transportation 
charges  against  the  shipment.  Dividing  total  cost  includ- 
ing these  transportation  charges  by  number  of  units 
on  hand,  gives  unit  cost. 

12-14.  Bills  of  material,  manufacturing  orders,  stores 
issues,  worked  material  issues,  or  other  forms  of  informa- 
tion, showing  what  materials  and  how  much  will  be 
needed  in  the  future  for  manufacturing  or  other  needs. 
This  information  is  for  the  purpose  of  apportioning  such 
demands  against  the  material.  Such  information  must 
include,  for  entry  on  the  sheet :  The  date  of  these  requests, 
and  the  account  number  or  symbol  to  which  supplies^are 
to  be  charged  when  finally  issued. 

15.  From  the  issues  mentioned  in  6  above,  after  pass- 
ing through  the  store  room  for  issue,  is  obtained  and 
entered  what  has  actually  been  issued  for  this  use. 

16.  By  subtraction  we  obtain  the  total  outstanding  on 
apportionment  after  deducting  this  particular  issue. 

17-18.  By  subtraction  and  notation  of  date. 
To  make  such  a  record  intelligible: 

(a)  The  sheet  must  be  so  arranged  as  to  be  readily 
understood  and  followed. 

(b)  There  must  be  a  continuous  flow  of  such  records 
currently  through  the  balance  sheet. 

(c)  Each  transaction  must  be  complete  in  itself  and  so 
entered,    complete   identification    of   each   entry   being 
insisted  upon. 


60  FACTORY  STORESKEEPING  .      , 

(d)  The  balance  sheet  must  form  a  permanent  record. 

(e)  The  balance  of  amount  ordered,  plus  the  amount 
on  hand,  minus  the  amount  apportioned,  must  equal  the 
amount  -available  at  any  time. 

In  order  to  conform  to  all  of  these  requirements,  the 
balance  sheet  must  have  a  minimum  of  four  columns;  one 
for  entries  relating  to  orders,  the  second  for  entries 
relating  to  amounts  on  hand,  the  third  for  amounts 
apportioned,  and  the  fourth  for  amounts  available. 
Although  extremely  common,  the  four  column  balance 
sheet  is  by  no  means  universal  for  this  purpose,  and 
various  numbers  of  columns  from  four  to  possibly  a 
dozen  are  encountered.  The  features  embodied  in  the 
more  elaborate  and  clumsy  sheets  usually  can  be 
incorporated  in  the  four-column  sheet,  and  for  clearness, 
small  amount  of  clerical  work,  and  general  ease  of  opera- 
tion, it  is  usually  to  be  preferred.  The  objection  most 
usually  made  to  it  is  that  it  does  not  provide  separate 
columns  for  entry  of  amount  received,  amount  issued 
and  amount  still  on  hand,  for  ease  in  tabulation.  As  will 
be  seen  on  the  sheet  itself,  however,  each  of  these  entries 
may  be  readily  picked  out  by  paying  attention  to  the 
respective  date  entries  which  identify  each  transaction 
in  the  different  columns. 

A  review  of  the  preceding  summary  of  transactions 
necessary  to  the  operation  of  this  balance  sheet  will 
immediately  emphasize  the  point  so  often  made  that  the 
balance  clerk  is  the  hub  of  the  material  procedure. 
Hardly  a  transaction  of  importance  occurs  from  replen- 
ishment to  issue  which  does  not  spring  from  or  lead  to 
the  balance  sheets,  and  if  they  are  properly  used  they 
constitute  an  encyclopedia  of  information  to  anyone  who 
desires  to  know  anything  about  the  state  of  materials. 
It  should  be  unnecessary  to  add  that  such  work  should 
not  be  intrusted  to  an  inexperienced  clerk,  and  that  the 
most  beautiful  records  in  the  world  will  not  of  themselves 
prevent  material  shortages. 


THE  MATERIAL  BALANCE  SHEETS 


61 


62  FACTORY  STORESKEEPING 

The  detailed  operation  of  this  sheet  may  be  more 
readily  seen  by  following  the  typical  transaction  shown 
on  the  sample  sheet.  These  transactions  are  entered 
on  Fig.  5. 

EXPLANATION  OF  ENTRIES 

For  examples  on  4-Col.  Balance  of  Stores  Sheet,  Fig.  5 
Opening          1.  Inventory  April  20,  1920;  250'  On  Hand;  Value  $1000.00 
(Obtained  by  physical  count  of  bin  contents) 
COL.  1-2     Date  Rec'd.:      1920,  4.20,  Inv. 
COL.  2         Quantity:          250 

Total  Cost:       1,000.00 
Cost  per  unit:         4 . 0000 

2.  Apportion  April  20;  50'  to  Order  A 
(Obtained  from  manufacturing  office) 
COL.  3         Date  Appor.:  4.20 

Quantity:         50 
Order  No.:       A 

3.  Determine  Amount   Available    (1+2—3=   4;   or   250 

-50  =  200) 

COL.  4         Date:         4.20 
Quantity:    200 

Transactions  4.  Apportion  April  25;  15'  to  Order  B 

(Obtained   from    current    manufacturing   orders    going 

through) 
COL.  3         Date:  4.25 

Quantity:  15;  enter  sum  65 
COL.  4         Quantity:  15;  enter  difference  185 

Date:  4.25 

Check  to  see  that  1  +  2  -  3  =  4,  in  this  case  250  - 

65  =  185 

5.  Apportion  May  1;  40'  to  Order  C 
COL.  3         Date  Appor.:  5.1 

Quantity:         40;  enter  sum  105;  "make  full 

check     opposite     previous   balance  65 
Order  No.:       C 

COL.  4         Quantity:  40;  enter  remainder  145 
Date:         5.1 

This  reduces  balance  available  (145)  below  the  order  point  indicated 
at  top  of  sheet  "When  Quantity  Available  Falls  To,"  (150),  so  that 
replenishment  order  must  be  issued  at  once  on  the  purchasing  agent  for 
the  quantity  indicated  in  the  "Issue  Order  For"  (300).  Therefore: 
(see  transaction  #6) 


THE  MATERIAL  BALANCE  SHEETS  63 

6.  Order  May  1;  300;  Requisition  #1052 
COL.  4         Quantity:  300:  enter  sum  445 

Remarks:  Req.  #1052 
Date:  5.1 

COL.  1         Date  of  Req.:  5.1 
Req.  No.:         1052 
Quantity:         300 
Check  1+2-3=4 

7.  Copy  of  Purchase  Order   #2  is  received  from  purchasing 

agent. 
COL.  1         Pur.  Order  No.:  2 

8.  Issued  May  2;  50'  for  Order  A 

(Obtained  from  properly  signed  stores  issue  from  the 

store  room) 

COL.  2         Quantity:        50;  enter  remainder  200 
Date  Issued:  5.2 
Issued  For:     A 

Total  Cost:  200.00  (50@  $4.00  each) 
COL.  3         Quantity:  50;  enter  remainder  55;  make  full 
check  opposite  original  apportioning  entry 
(top  line)  and  opposite  previous  balance 
105,  since  these  are  now  dead  figures. 

This  leaves  55  still  outstanding  on  apportionment;  the  breaks  in  the 
vertical  check  show  that  15  of  this  was  reserved  for  Order  B  on  April  25, 
and  40  for  Order  C  on  May  1. 

Order  No.:      A 
Date  Issued:  5.2 
Check  1+2-3=4 

9.  Issue  May  10;  15'  for  Order  M 

Since  this  has  not  been  previously  apportioned  it  must  be  subtracted 
both  from  amount  on  hand  and  amount  still  available : 

COL.  2         Quantity:        15;  enter  remainder  185    . 
Date  Issued:  5.10 
Issued  for:      M 
Total  Cost:     60.00 
COL.  4         Quantity:  15;  enter  remainder  430 

Date:          5.10 
J^heck  1+2-3=4 
10.  Issue  May  15;  30'  for  Order  C 

COL.  2         Quantity:        30;  enter  remainder  155 
Date  Issued:  5.15 
Issued  for:      C 
Total  Cost:     120.00 

COL.  3  Quantity:  30;  enter  remainder  25;  since  this 
issue  was  for  30  whereas  the  original 
apportionment  for  Order  C  called  for  40, 
draw  a  %  vertical  check  opposite  original 
apportioning  entry  to  show  that  part  (10) 


64  FACTORY  STORESKEEPING 

of  this  apportionment  is  still  outstanding; 
draw  full  check  opposite  previous  balance 
55,  and  the  entry  just  made  for  the  issue  30. 
Order  No.:      C 
Date  Issued:  5.15 
Check  1+2-3=4 

11.  Received  Shipment  May  20;  300'  on  Purchase  Order  #2, 
Requisition  1052;  cost  $250  per  lb.,  plus  $3.00  expenses. 

Quantity:  300;     enter    balance     out- 

standing on  order  00;  make  full  check  down 
to  and  including  this  balance. 
COL.  1-2     Date  Rec'd.:  5.20 
COL.  2         Quantity:       300;  enter  sum  455 

Total  Cost:     1,430.40  (at  1. 83  lb.  per  foot,  this 
gives   549  lb.,  which  at  $2.60  per  lb.    = 
$1,427.40  cost  of  steel 
3. 00  express 


$1,430.40  total  cost  for  300  ft. 
Enter  sum  $2,050.40 

*  Cost  per  Unit:  $4.5064    (total    quantity    on 

hand     455',     divided     into     total     value 

$2,050.40).     Future  issues  are  made  at  this 

new  unit  price. 
Check  1+2-3=4 

12.  Credit  May  22;  5'  to  Order  C 

(Obtained  from  properly  signed  stores  credit  from  the 

store  room) 

COL.  1-2     Date  Rec'd.:  5.22 
COL.  2         Quantity:       5;  enter  sum  460 
Issued  for:     C     Credit 
Total  Cost:     22.53;  enter  sum  $2,072.93 

(5  Pieces  at  new  unit  price  of  $4.5064) 
COL.  4         Quantity:  5;  enter  sum  435 
Remarks:     Credit  C 
Date:  5.22 

Check  1+2-3=4 

13.  Cancel  May  23  balance  apportioned  to  Order  C  —  10' 
(Obtained  from  cancel  notice  from  manufacturing  office) 
COL.  3         Quantity:  10;  enter  difference  15;  complete 

half  check  previously  made  opposite  origi- 
nal apportionment;  make  full  check  opposite 
previous  balance  25,  and  entry  just  made  10. 

This  leaves  15  still  outstanding  on  apportionment.     The  break  in  the 
vertical  check  shows  that  this  was  reserved  for  Order  B  on  April  25. 
Order  No.:      C  Cancelled 
Date  Issued:  5.23 


MATERIAL  BALANCE  SHEETS 


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66 


FACTORY  STORESKEEPING 


COL.  4  Quantity:  10,  enter  sum  445 
Remarks:  Cancel  Balance  C 
Date:  5.23 

Check  1+2-3=4 

14.  Bin  tag  received  May  25,  hand  count  shows  460'  on  hand 
COL.  1-2  Make  full  check  down  to  and  including  book 
balance  of  460,  since  the  two  agree.  If  they 
do  not  agree,  find  out  why  and  make  necessary 
adjustment  in  accordance  with  instructions 
for  such  cases. 

COL.  4  Check  to  see  that  balances  1+2  —  3=4,  and 
if  so  make  full  check  to  and  including  last 
balance  445. 

Plan  C. — Replenishment  on  Schedule. — Once  require- 
ments in  materials  for  a  considerable  period  in  the  future 


UNCLASSIFIED 

CONSECUTIVE 
NO. 

g 

5 

DESCRIPTION  OF  ARTICLE 

COST 

RECEIVED  AND  ISSUED 

1919 

NUMBER 

ORDER 

NUMBER 

Mil 

M~* 

CO.T 

C-iAnuE 

$561 

1 

0  JtyAfJJ/tiTfh    (isrirtJ/tA 

/-/ 

/oo 

2 

AJ 

3 

36" 

<J&W 

// 

/~6' 

Sb 

a'/s 

XCAP)F 

S562 

$563 

$564 

$565 

$566 

$ 

$ 

FIG.  8.- — Unclassified  stores  sheet. 


are  known,  there  are  several  ways  in  which  the  desired 
flow  may  be  secured.  Where  plans  may  be  followed 
without  variation,  the  simplest  method  is  to  list  or  put  on 


THE  MATERIAL  BALANCE  SHEETS 


67 


ticklers  the  dates  when  the  various  purchases  are  to  be 
made.  This  method,  however,  provides  for  no  follow-up 
in  case  production  becomes  more  or  less  than  planned, 
and  in  such  cases  the  balance  sheet  described  for  Pan  A 
may  be  satisfactory  where  production  is  not  too  irregular 
or  that  illustrated  in  Fig.  6,  may  be  more  serviceable 
where  we  can  look  ahead  a  long  time,  but  where  rate  of 
production  is  not  predictable.  This  sheet  is  similar  to 
that  of  Plan  B,  with  the  addition  of  a  " schedule"  column. 
Worked  Material  Balance  Sheets. — The  balance  of 
worked  materials  sheet,  in  design  and  operation  may  in 
many  cases  be  very  similar  to  that  of  stores.  In  other 


STORES 


BALANCE  AND    ISSUED 


BAI  ANCE  AND   ISSUtO 


BALANCE  ANJ   ISSUED 


DATE       NUMBER       CCbT  CHARGE 


HI} 


l-l-ft 


1-6 


1-20 


[ 


cases  the  need  is  felt  for  two  additional  columns,  which 
are  shown  and  explained  in  Fig.  7. 

Unclassified  Stores  Balance  Sheets. — Little  need  be 
said  in  regard  to  the  balance  sheet  for  unclassified  stores, 


68  FACTORY  STORESKEEPING 

since  its  operation  will  be  entirely  clear  from  the  sample 
sheet  shown  in  Fig.  8.  This  is  used  only  for  items  which 
are  not  regularly  stocked,  but  which  are  ordered  for 
special  purposes  and  ordinarily  issued  for  those  purposes 
just  as  soon  as  received.  This  sheet  should  be  inspected 
from  time  to  time  to  catch  recurring  items  which  may  be 
transferred  to  the  classified  list  and  kept  regularly  in 
stores. 


FIG.  9. — Balance    record    files,    containing    over    5,000    separate    material 

balance  sheets. 

Balance  Record  File. — Although  loose  cards  of  various 
sizes  instead  of  sheets  are  frequently  found  in  use,  it  is 
felt  that  in  general  the  use  of  the  latter  is  much  safer  and 
more  satisfactory.  The  danger  of  misplacing  a  card 
where  there  are  possibly  thirty  thousand  items  in  the 
store  room,  each  requiring  at  least  one  card,  is  very 
considerable  and  causes  extreme  annoyance  when  it 
occurs.  Loose-leaf  binders  of  this  number  of  sheets, 
however,  also  have  the  disadvantage  of  taking  up  a  great 
deal  of  room  and  of  being  either  heavy  or  involving  a 
great  number  of  volumes.  Some  of  the  improved  card- 
filing  devices  remedy  both  of  these  defects  quite  satis- 


PURCHASING  MATERIAL  CONTROL  69 

factorily,  giving  a  maximum  number  of  sheets  or  cards  in  a 
minimum  space,  making  it  impossible  to  misplace  a  card, 
and  avoiding  the  lifting  of  heavy  volumes  since  entries 
are  made  in  position.  Figure  9  shows  a  compact 
arrangement  accommodating  over  5,000  separate  balance 
sheets. 


CHAPTER  VI 

THE  PURCHASING  DEPARTMENT  AS  RELATED 
TO  MATERIAL  CONTROL 

SUMMARY:  Importance. — Speculative  Purchasing. — Routine  Purchasing. 
— The  Purchase  Order.  Distribution  of  Copies. — Follow-up  of  Orders. — 
Other  Purchase  Records. 

The  Importance  of  the  Purchasing  Office  in  Material 
Routine. — The  regulation  of  material  is  logically  and 
necessarily  the  job  of  the  production  department. 
There  is  no  more  important  function  in  material  work, 
however,  than  that  performed  by  the  purchasing  depart- 
ment, since  irregularities  here  will  destroy  the  effective- 
ness of  an  otherwise  perfect  stores  routine.  In  modern 
business  it  is  no  longer  the  exceptional  and  spectacular 
transactions  which  make  one  plant  stand  out  above 
another — it  is  largely  the  pennies  saved  here  and  there 
which  go  to  form  dividends.  Such  savings  may  be 
accomplished  only  through  a  well  rounded  and  balanced 
organization,  and  since  material  routine  heads  into 
purchasing  at  so  many  points  it  is  essential  to  take  the 
viewpoint  that  " material  control"  includes  all  officials 
who  in  any  way  are  responsible  for  or  deal  with  this 
part  of  the  business.  From  this  viewpoint,  therefore, 
purchasing  forms  a  most  important  link  in  this  chain. 
It  does  not  follow  that  the  purchasing  agent  must  in  all 
cases  report  to  production  from  an  administrative 
standpoint  (see  Chart  of  Organization,  Chap.  Ill, 
page  33). 

The  purchasing  office  has  a  chance  to  affect  profits 
at  every  turn,  and  at  many  times  the  difference  between 
dividends  and  bankruptcy  may  rest  upon  the  transac- 
tions of  this  department.  One  instance  will  illustrate 

70 


PURCHASING  MATERIAL  CONTROL  71 

the  directness  of  this  effect,  where,  by  a  decrease  of  6.37 
per  cent  in  the  cost  of  the  raw  materials  themselves  the 
net  profit  was  increased  9.7  per  cent. 

TABLE  I 


.  59  Decrease  of  6.37  per  cent 


IVlaterial 

ORIGINAL 
PER 
PIECE 

$      63 

NEW 
PER 
PIECE 

$      59 

Labor            

.10 

.10 

Overhead 

05 

.05 

Total  cost 

$   .78 

$   .74 

Selling  price 

$1  40 

$1  40 

Profit 

$     62 

$     66 

Per  cent  of  cost.  . 

79.5 

89.2 

89.2    Increase  of  9.7  per  cent 

It  is  not  with  technical  purchasing,  however,  that  this 
chapter  deals.  This  part  of  the  work  of  the  purchasing 
office  in  the  average  plant  is  conducted  extremely  well, 
for  the  modern  purchasing  agent  has  been  trained  to  the 
specific  duty  of  securing  suitable  material  at  the  best 
price,  and  various  works  upon  the  subject  may  be  found 
in  any  library.  The  more  routine  part  of  his  work, 
however,  has  not  been  sufficiently  emphasized  particu- 
larly as  it  affects  the  degree  of  control  which  may  be 
exercised  over  functions  other  than  buying  proper. 
Many  purchasing  agents  can  really  be  lifted  out  of  the 
rut  into  which  they  have  fallen  through  standardizing 
the  many  little  irregularities  which  distract  so  much 
attention  from  the  work  which  constitutes  their  main 
interest.  The  importance  of  the  many  points  of  contact 
between  the  purchasing  office  and  the  rest  of  the  organi- 
zation dealing  with  materials,  and  some  of  the  means  by 
which  this  contact  may  be  made  more  effective  in  practice, 
should  become  clear  from  the  following  discussion. 

After  the  engineering  department  has  furnished  lists 
and  specifications  of  material  to  be  kept  on  hand,  after 
the  traffic  and  purchasing  departments  have  in  conjunc- 
tion furnished  time  necessary  to  renew,  to  which  has  been 
added  other  allowances  for  clerical  work  and  for  necessary 


72  FACTORY  STORESKEEPING 

delays,  and  after  the  material  balance  sheets  have  been 
put  in  operation  through  a  passage  for  entry  of  all 
necessary  papers,  the  replenishment  order  originating 
from  the  balance  sheet  or  otherwise  sets  the  purchasing 
machinery  in  operation.  The  characteristics  and  re- 
quirements for  such  a  replenishment  order  were  treated 
in  Chap.  IV.  It  is  not  strictly  the  purchasing  agent's 
province  to  originate  requests  for  material,  although  it 
is  his  duty  to  notify  the  production  department  or  the 
specific  man  responsible  for  material  control  routine,  as 
to  any  probable  changes  in  the  market  or  other  factors 
which  in  his  judgment  make  purchase  desirable,  and  in 
the  case  of  speculative  purchasing  he  may  originate 
replenishment  orders.  In  general,  however,  his  duties 
start  with  the  receipt  of  replenishment  order,  and  on  this 
authority  all  of  his  future  actions  are  based.  It  therefore 
follows  without  argument  that  no  oral  requests  for  replen- 
ishment must  be  acted  upon  by  the  purchasing  agent 
unless  they  be  immediately  followed  with  a  written 
confirmation  on  the  proper  form  properly  approved. 
A  relaxation  in  this  respect  will  soon  put  the  purchasing 
agent  on  the  defensive  if  he  has  not  the  replenishment 
order  to  fall  back  upon. 

The  discussion  up  to  this  point  applies  equally  to 
speculative  and  to  routine  purchasing.  Upon  the  receipt 
of  the  replenishment  order,  however,  the  procedure  varies 
until  the  contract  is  closed.  It  is  therefore  necessary  to 
treat  this  intermediate  stage  under  two  divisions. 

1.  Speculative  Purchasing. — Whether  or  not  both 
kinds  of  purchasing  are  done  by  one  man  or  by  different 
men,  the  only  difference  in  procedure  between  specula- 
tive and  routine  purchasing  is  that  in  the  former  case 
the  amount  of  any  item  in  the  speculative  class  called 
for  on  the  replenishment  order  must  be  looked  upon  simply 
as  indicating  production's  actual  needs  for  the  time  being 
and  not  as  a  hard  and  fast  amount  which  must  be  bought. 
In  other  words,  the  purchasing  agent  is  not  governed  so 


PURCHASING  MATERIAL  CONTROL  73 

strictly  by  amount  called  for  on  the  replenishment  order 
as  he  is  in  the  case  of  routine  purchasing;  depending  on 
the  state  of  the  market  and  other  factors,  he  may  order 
either  more  or  less,  at  a  given  time,  than  there  called  for. 
The  replenishment  order,  however,  is  production's  best 
judgment  as  to  how  much  of  any  material  should  be 
ordered,  and  if  the  purchasing  agent  wishes  to  depart 
from  this  judgment  in  any  specific  case,  he  may  (1) 
consult  the  production  department  or  possibly  the  general 


APPROVAL  TO    CHANGE  AMOUNT   REQUISITIONED 

To  Mr  : 

*  //_ 

A  replenishment  order  _ for Of 

(description  of  Article  ) 
has  beeu  received  from  the  balance  clerk.  It  is    recommended  that  the  amount  to  bi 

purchased   on  this  requisit»ou  be  changed  to tot  the  following  reasons 

( revised  quuumy) 


(Purchasing  Agent ) 


Signed'. 


FIG.   10. — Approval   for   purchasing   agent   to   change   amount   of   material 
specified  on  replenishment  order. 

manager,  or  both,  or  (2)  have  blanket  authority  to  in- 
crease by  a  definite  amount  or  a  certain  percentage  the 
amount  called  for  on  the  replenishment  order,  or  (3) 
he  may  if  desired  be  required  to  secure  written  approval 
for  each  transaction,  on  a  form  similar  to  that  shown 
in  Fig.  10. 

In  any  event,  however,  it  must  be  made  perfectly  clear 
to  the  purchasing  agent  that  it  is  not  only  his  privilege 
but  his  duty  to  take  up  such  cases  as  he  thinks  desirable, 
since  production  is  not  infallible  in  these  matters,  and 
since  any  one  of  the  following  factors  may,  in  the  pur- 
chasing agent's  opinion,  justify  buying  more  or  less  than 
the  quantity  called  for: 

1.  Traffic  conditions.  A  freight  embargo  which  gives 
appearance  of  lasting  any  considerable  period  would 


74  FACTORY  STORESKEEPING 

immediately  call  for  an  adjustment  upward  of  the 
amount  to  order.  Here  cooperation  with  the  traffic 
department  is  called  for. 

2.  The  supply  and  demand  for  the  particular  article 
to  be  purchased.     The  purchasing  agent  should  keep 
informed  as  to  the  state  of  production  in  each  article 
and  as  to  the  probable  demand  throughout  the  country 
for   it. 

3.  The    probable    price    movement — particularly    in 
articles  which  are  subject  to  stock  market  speculation  or 
which  are  particularly  sensitive  to  business  conditions. 

4.  Sales  tendencies  for  the  product  in  which  the  article 
is  to  be  used.     Is  the  demand  increasing  or  diminishing, 
and  is  production  able  to  keep  up  with  or  ahead  of  any 
increase?     In  such  matters,  guidance  from  finance,  sales, 
and  production  is  necessary,  but  such  conditions  must 
not  be  overlooked  by  the  purchasing  agent,  and  keen 
insight  into  vagaries  of  the  business  cycle  is  necessary  to 
relate  purchases  to  price  and  sales  trends. 

5.  The  labor  market.     Is  an  ample  supply  of  labor 
available?     Here  again  this  is  primarily  production's 
concern,  and  yet  the  purchasing  agent  from  his  contact 
with  traveling  salesmen  and  others  is  in  a  position  to 
furnish  production  accurate^  and  current  information  in 
regard  to  such  conditions. 

6.  Storage  considerations.     Have  we  sufficient  room 
to  store  all  that  we  would  like,  and  if  not,  where  and  at 
what    cost   may  adequate  accommodation  be  secured? 
Will  the  additional  cost  of  such  storage  counterbalance 
any  probable  saving  due  to  buying  in  quantities  far  in 
excess  of  known  production  needs? 

7.  The    state    of   the   finances    of   the  company.     Is 
money  available  for  buying  an  excess  of  material,  no 
matter  how  desirable,  and  will  the  loss  of  interest  on  such 
idle  money  counteract  any  price  reduction  from  buying 
in  quantity? 

Since  most  of  these  matters  are  largely  questions  of 


PURCHASING  MATERIAL  CONTROL  75 

judgment,  the  only  safe  procedure  is  for  the  purchasing 
agent  to  be  furnished  the  regular  replenishment  orders 
emanating  from  the  balance  sheets.  This  will  back  up 
production,  and  in  order  to  back  up  the  purchasing  agent, 
he  may  secure  the  written  approval  of  the  general 
manager  or  some  other  official  when  the  amount  called 
for  on  the  replenishment  order  is  departed  from.  In 
times  of  hand-to-mouth  buying,  the  replenishment  order 
will  assist  in  preventing  overstocking;  on  a  rising  market 
where  long  contracts  may  be  placed  it  may  still  serve  to 
secure  deliveries  in  accordance  with  production  needs. 
It  may,  therefore,  serve  a  useful  purpose  at  all  times. 
As  indicated  previously,  the  purchasing  agent  is  expected 
to  initiate  action  even  before  receipt  of  replenishment 
order  if,  in  his  judgment,  conditions  appear  to  require  or 
render  advisable  immediate  or  heavy  purchase. 

After  a  decision  to  purchase  is  made  and  approval 
secured,  technical  purchasing  then  comes  into  play  until 
the  terms  are  made  and  the  contract  closed.  The  pro- 
cedure from  then  on  is  identical  under  both  speculative 
and  routine  purchasing,  and  it  is  therefore  continued 
under : 

2.  Routine  Purchasing. — It  may  be  objected  that  such 
a  division  of  work  and  responsibility  is  limiting  the  pur- 
chasing agent  and  giving  him  a  smaller  place  within  the 
organization  than  that  to  which  he  is  rightfully  entitled. 
Such,  indeed,  is  almost  the  invariable  reaction  when 
such  a  reorganization  is  proposed  to  an  existing  pur- 
chasing agent.  That  the  reverse  is  actually  true,  how- 
ever, in  that  the  purchasing  agent  is  given  a  much  better 
opportunity  to  measure  up  to  his  responsbilities  would  seem 
to  be  proved  by  the  number  of  plants  and  purchasing 
agents  who  have  found  such  an  arrangement  entirely  satis- 
factory. By  such  a  clear  definition  of  duties  according 
to  functional  lines  and  abilities,  assisted  and  controlled 
through  a  logical  and  simple  routine,  many  purchasing 
agents  have  found  that  they  could  give  more  attention 


76 


FACTORY  STORESKEEPING 


C  STORES  SYMBOL 


REQt/ISITIONER 

PURCHASE  REQ. 
NO. 


SHIPPING  DIRECTIONS 

&HIP  TO  THE   COMPANY   AT 
iHOW   NO.  5        ORDER 


No.          5 

PUT  THIS   NUMBER 

ON  YOUR  INVOICES 

RENDER    INVOICES 

IN    DUPLICATE 


PLEASE    FURNISH    SUPPLIES    LISTED    BEllOW,    SENDING   SHIPPING 
RECEIPT    TO    US   ON    DATE   OF   SHIPMENT. 


BALANCE    CLERK 


o 


Ho. 


RECEIVING    DEPARTMENT 


O 


No.         5 


-v     PURCHASE   TICKLER 

\\        fj  —  ==?— 

TICKLE 

COMPLETED  

URGED 

PROMISED 

FIG.  11. — The  purchase  order,  in  this  case  made  out  in  6  copies.     The  last 
one  is  the  Tickler. 


PURCHASING  MATERIAL  CONTROL  77 

to  those  features  of  the  work  for  which  they  have  long 
desired  more  time,  can  stand  absolutely  within  their  own 
ground  as  defined,  and  yet  have  ample  chance  to  influence 
others  with  whom  their  work  is  connected.  It  is  simply 
a  further  logical  extension  of  the  modern  sub-division  in 
administrative  duties  whereby  each  man  may  become  a 
real  specialist  in  his  own  particular  line,  unhampered  by 
irrelevant  or  distasteful  routine,  or  wrongly  placed 
responsibility. 

The  Purchase  Order. — After  decision  to  purchase  is 
reached,  therefore,  the  formal  purchase  order,  Fig.  11, 
is  issued. 
This  must  provide  for. 

1.  The  serial  number  of  the  purchase  order.     This 
gives  a  cross  index  between  replenishment  order  and 
purchase  order,  since  when  the  latter  is  made  out  its 
number  must  be  entered  to  the  replenishment  order  and 
the  replenishment  order  number  entered  to  the  purchase 
order.     In  case  one  replenishment  order  calls  for  several 
articles  requiring  several  corresponding  purchase  orders, 
care  must  be  taken  to  see  that  these  cross  reference 
entries  be  completed. 

2.  The  name  of  the  company  who  is  making  the 
purchase. 

3.  The  date  of  the  order. 

4.  The  name  of  the  vendor  from  whom  the  purchase 
is  to  be  made. 

5.  The  quantity  and  description  of  the  goods  ordered. 
This  should  be  specific,  so  that  if  there  is  any  mistake  in 
the  goods  the  vendor  cannot  lay  it  to  our  lack  of  definite- 
ness  or  detail. 

6.  The  date  delivery  is  wanted.     This  again  is  just 
as  important  on  the  purchasing  order  for  the  information 
of  the  vendor  as  it  is  on  the  replenishment  order  for  the 
guidance  of  the  purchase  agent. 

7.  Shipping  and  billing  directions.     Much   trouble 
is  caused  in  every  receiving  department  because  incoming 


78  FACTORY  STORESKEEPING 

packages  are  improperly  marked.  The  necessity  of 
marking  all  packages  on  the  outside  with  the  purchase 
order  number  should  be  emphasized  in  a  prominent 
place  on  the  face  of  the  purchase  order. 

8.  The  symbol    or    other  short  designation  of  the 
article  ordered.     This  is  for  definiteness  and  to  save 
clerical   work   in   writing   and   re-writing   long   names. 

9.  The  name  of  the  requisitioner. 

10.  The  department  or  person  for  whom  ordered. 

11.  The  replenishment  order  number   (see  use  under 
1  above). 

12.  The  signature  of  the  purchasing  agent. 

The  matter  listed  under  numbers  1,  2,  and  7  as  far  as 
standard  shipping  and  billing  directions  go,  may  of 
course,  be  printed  on  the  form  when  it  is  set  up. 

The  purchase  order  must  be  made  in  varying  numbers 
of  carbon  copies  according  to  circumstances  and  proce- 
dure. Ordinarily  there  should  be  the  following : 

1.  The  original  to  be  mailed  to  the  vendor. 

2.  A  copy  for  the  requisitioner. 

3.  A  copy  for  the  purchasing  agent's  office  to  be  filed 
by  serial  number  of  the  purchase  order. 

4.  A  copy  for  the  purchasing  agent's  office  to  serve  as  a 
follow-up  tickler. 

5.  A  copy  for  the  balance  and  receiving  men. 

In  addition  to  these,  various  other  copies  may  be 
needed;  for  instance  one  for  each  department  foreman 
who  is  to  work  upon  the  material  ordered,  one  for  the 
auditor,  and  the  commitment  record,  and  so  on. 
Ordinarily,  however,  the  five  copies  listed  serve  as  a 
simple  and  effective  basis  for  strict  control  and  follow 
up.  These  will  be  commented  upon  in  the  next  topic  in 
the  order  in  which  they  usually  come  into  use. 

The  Follow-up  of  Outstanding  Purchase  Orders.— 
The  purchasing  agent's  obligation  should  by  no  means 
cease  with  the  dispatch  of  the  purchasing  order.  Upon 
him  falls  the  duty  of  specifying  time  necessary  to  renew; 


PURCHASING  MATERIAL  CONTROL  79 

his  responsibility,  therefore,  commences  with  the  receipt 
of  the  replenishment  order  and,  together  with  that  of 
the  traffic  department,  continues  until  the  goods  are 
laid  down  at  the  factory  door  in  the  time  set.  It 
therefore  behooves  him  not  only  to  allow  himself  plenty 
of  margin  in  quoting  such  delivery  time,  but  also  to 
notify  the  production  department  immediately  if  for 
any  reason  he  receives  a  replenishment  order  calling 
for  delivery  at  a  date  which  he  knows  cannot  be  lived  up 
to,  tor  his  acceptance  of  this  date  throws  upon  him  the 
responsibility  of  having  the  goods  on  hand  at  the  time 
set  provided  the  request  is  made  within  the  allowable 
time. 

In  order  that  all  data  in  regard  to  each  transaction  be 
readily  available,  and  that  adequate  supervision  of 
outstanding  orders  be  possible,  it  is  necessary  first  that 
an  automatic  follow-up  of  each  order  be  secured,  second 
that  complete  information  covering  the  articles  ordered 
themselves  and  amounts  of  various  articles  outstanding 
with  any  vendor  be  obtainable,  and  third  that  adequate 
files  of  catalogs,  specifications,  quotations  and  similar 
material  be  readily  available. 

The  use  of  the  copies  of  the  purchase  order  enumerated 
above  by  which  this  follow-up  of  each  order  is  obtained 
follows : 

1.  The  Original. — This  goes  to  the  vendor  and  should 
leave  no  doubt  in  his  mind  as  to  exactly  what  and  how 
much  is  wanted,  when  shipment  is  desired  and  how  it  is 
to  be  made,  and  terms  of  purchase. 

2.  Requisitioned s  Copy. — Upon  receipt  of  this  copy  it 
is  the  requisitioned  duty  to  check  its  accuracy  and  to 
report  back  immediately  to  the  purchasing  agent  if  it  is 
not  satisfactory  in  every  way.     His  failure  to  do  so 
throws  back  upon  him  responsibility  for  mistakes  in  the 
order  itself,  since  the  purchasing  agent  becomes  relieved 
of  this  responsibility  by  forwarding  a  duplicate  copy  of  a 
correct  transcription  of  the  replenishment  order.     This 


80  FACTORY  STORESKEEPING 

copy  carries  back  to  the  requisitioner  the  only  notifica- 
tion he  has  of  the  purchase.  It  must  bear  the  purchase 
order  number  so  that  this  number  may  be  given  the 
purchasing  agent  when  requesting  information  as  to  the 
transaction. 

3.  The  Purchasing  Agent's   Copy    by  Purchase  Order 
Number. — This  copy  should  be  made  out  on  paper  suitable 
for  permanent  filing  in  a  loose-leaf  binder,  where  each 
new  order  should  be  filed  by  serial  number  when  issued. 
On  this  copy  should  be  entered  all  notations  of  action 
taken  in  the  case,  so  that  a  summary  of  all  transactions 
may  be  instantly  available.     If  the  terms  of  purchase  are 
modified  after  the  original  order  has  been  mailed,  if  a 
new  delivery  date  has  been  agreed  upon,  or  in  fact  if 
anything  has  occurred  to  modify  the  original  agreement, 
notation  to  this  effect  should  be  made  on  this  copy. 
Progress   of   fulfilment   of  the  contract  should  appear 
here,  and  when  it  has  been  completed  this  copy  should  be 
so  stamped.    It  remains  as  the  permanent  purchasing  office 
record  of  the  transaction,  supplemented  by  correspond- 
ence and  other  matter  in  the  letter  file. 

4.  The  Purchasing  Agent's  Tickler  Copy. — Every  pur- 
chase order  sent  out  should  have  a  delivery  date  indicated 
on  it.     This  date  may  be  of  vital  concern  or  of  compara- 
tively little  moment  as  the  case  may  be;  nevertheless 
some  date  must  appear.     This  date,  moreover,  must  go 
out  with  the  expectation  that  the  vendor  will  live  up  to 
it  or  notify  us  to  the  contrary  immediately  upon  its 
receipt  or  when  he  finds  it  impossible  to  do  so.     The 
burden  of  the  follow-up,  however,  must  rest  upon  the 
purchasing  agent,  since  no  one  will  look  after  our  business 
for  us  if  we  fail  to  do  our  part.     Depending  upon  the 
urgency  of  the  order,  therefore,  the  purchasing  agent 
will  enter  a  date  on  the  tickler  copy  when  he  wishes  the 
transaction  brought  to  his  attention.     The  date  of  deliv- 
ery may  be,  say,  August  1,  and  since  it  is  imperative  that 
the  goods  be  received  not  later  than  that  date  it  is  desir- 


PURCHASING  MATERIAL  CONTROL  81 

able  to  follow  up  the  order  on  July  25.  This  date,  July 
25,  would  then  be  entered  as  the  tickler  date,  see  Fig.  1 1 
(page  76) .  The  tickler  copy  would  then  be  filed  in  a  special 
tickler  cabinet  with  drawers  or  guides  for  each  month 


Form  No.  SF  5  AR 

,...192 

Gentlemen : 

Please  advise  by  return   mail,  when  our  order  No. 
date  and  wanted  will  be  shipped. 

LEWIS  MANUFACTURING  COMPANY 

MAKERS  OF  (g^tty  PRODUCTS 

WALPOLE,  MASS, 

Address  reply  to  Purchasing  Department. 


FIG.  12 A. — Postal  Follow-up:  for  requesting  shipment  date  of  outstanding 

purchase  orders. 


. 192  . 

Gentlemen : 

Your  Order  No.  wiH  be  shipped 

from  on 

,         Freight 
by    Expre»s 
3     Parcel  Port 

Signed-  


Fia.   12B. — Postal  Follow-up:  for  vendor  to  report  shipment  date  of  out- 
standing purchase  orders. 

of  the  year  and  folders  for  each  day  of  the  month,  When 
July  25  arrives,  the  clerk  will  remove  all  papers  in  that 
folder,  which  may  contain  not  only  this  copy  of  the  pur- 
chase order  but  also  any  other  matters  to  which  the 
purchasing  agent  desires  his  attention  called  on  this 
date.  The  tickler  copy  will  be  laid  on  the  purchasing 


82  FACTORY  STORESKEEPING 

agent's  desk,  when  he  will  take  such  follow-up  measures 
as  he  deems  desirable.  Figure  12  has  been  found  satis- 
factory for  this  purpose,  and  results  in  a  considerably 
higher  percentage  of  replies  than  where  the  routine 
formal  letter,  requiring  on  the  part  of  the  vendor  the 
repetition  of  information  identifying  the  order,  is  used. 

When  delivery  of  an  outstanding  order  is  delayed,  or 
when  the  purchasing  agent  obtains  information  that  it 
will  be  delayed,  he  must  immediately  notify  the  requisi- 
tioner  to  this  effect.  It  may  of  course  not  be  considered 
necessary  to  follow  up  every  order  before  shipment  is  due 
from  vendor,  for  to  do  so  entails  much  additional  work. 
On  the  other  hand,  some  plants  find  it  advisable  to 
follow  up  systematically  all  orders  3  or  4  days  before  they 
are  due.  Such  procedure  is  recommended  particularly 
during  upset  traffic  conditions.  In  any  event,  however, 
the  purchasing  agent  is  not  ordinarily  in  a  position 
to,  and  should  not  be  expected  to  differentiate 
between  those  articles  for  which  there  is  urgent  need  and 
those  which  may  come  along  somewhat  after  the  date 
promised,  so  that  if  receipt  is  to  be  delayed  he  must 
immediately  seitd  to  the  requisitioner  a  notice  to  that 
effect.  Then,  according  to  the  requisitioner 's  reply  as 
to  urgency  of  delivery,  he  may  deal  with  the  exceptions 
only,  letting  the  shipment  go  for  a  few  days  or  bringing 
all  possible  pressure  to  bear  for  quick  delivery  as  the 
particular  case  demands. 

After  the  follow-up  is  obtained  and  a  new  delivery 
date  is  set,  another  follow-up  date  is  entered  on  the 
bottom  of  tickler  copy  and  it  is  again  filed  under  that  date 
and  when  shipment  is  complete  it  may  be  destroyed  or 
otherwise  filed  as  desired. 

5.  The  Receiving  Clerk's  Copy. — This  copy  of  the  pur- 
chase order  may  first  pass  through  the  balance  clerks  for 
posting  to  the  proper  balance  sheet,  either  classified  or 
unclassified.  It  then  goes  to  the  receiving  man  who 
posts  it  temporarily  for  the  inspector  to  note  and  then 


PURCHASING  MATERIAL  CONTROL  83 

files  it  by  name  of  vendor,  or  a  separate  copy  may  be 
made  for  information  and  retention  by  the  balance  clerk. 

It  is  well  to  let  the  inspector  look  over  the  receiving 
man's  copy  of  the  purchase  orders  as  soon  as  they  are 
received,  particularly  in  the  case  of  large  orders,  so  that 
he  may  make  arrangements  for  inspection  himself, 
delegate  this  work  to  another,  or  give  any  necessary 
directions  for  it. 

Other  Purchase  Records. — Before  taking  up  the  final 
stages  in  the  receiving  of  goods,  the  other  records  neces- 
sary to  adequate  purchasing  regulation  may  be  pointed 
out.  We  have  described  so  far  the  following  records: 

1.  Original  replenishment  order.     After  the  resulting 
purchase  order  is  made  out,  this  replenishment  order  is 
filed  by  date  of  requisition. 

2.  Copy  of  the  purchase  order  filed  by  serial  number. 

3.  Requisitioned  copy  of  purchase  order. 

4.  Tickler  copy  of  purchase  order. 

5.  Balance  and  receiving  clerk's  copy  of  purchase  order. 
In   order  to   conform   to   the  requirements  listed  on 

page  79,  it  is  necessary  further  that  the  purchasing 
departments  have  records  as  follows: 

6.  Alphabetical   letter   file   for    correspondence   with 
various  vendors.     This  file  should  be  supplemented  by 
a  tickler  file. 

7.  A  card  index  or  other  record  by  material.     These 
may  be  filed  either  by  name  of  material,  or  preferably 
by  symbol  if  symbols  be  used.     In  any  event,  this  form 
should  show  description  of  material,   date  of  various 
replenishment  and  purchase  orders,   from  whom  pur- 
chased,  quotation  and  delivery.     Such  extensive  data 
is  unnecessary  in  smaller  plants  and  I  have  found  some 
purchasing    offices    conducted    perfectly    satisfactorily 
where  this  record  shows  only  name  of  article  and  changes 
in  price. 


84  FACTORY  STORESKEEPING 

8.  Vendor's  file,  showing  name  and  address  of  each 
vendor  with  whom  we  deal,  articles  purchased,  terms 
and  deliveries.     This  record  again  may  be  unnecessary 
in  smaller  plants. 

9.  Catalog  file.     Some  systematic  method  should  be 
adopted  for  filing  catalogs,  since  in  the  average  purchas- 
ing office  constructive  use  is  not  made  of  them  due  simply 
to  their  inaccessibility.     A  system  of  numbering  at  least 
each  catalog  should  be  employed,  and  a  card  index  by 
article  should  refer  to  every  catalog  in  which  this  article 
is    described.     Another   card   index   by   manufacturers 
should  show  the  iile  number  of  each  manufacturer's 
catalog. 

Depending  on  the  type  of  balance  sheet  used  and  the 
information  which  is  summarized  on  it,  some  of  the  above 
records  can  be  eliminated.  For  instance,  suppose  it  is 
desired  to  find  the  names  of  the  various  vendors  from 
whom  we  have  ordered  a  certain  article  during  the  past 
year;  instead  of  the  purchasing  agent's  being  required  to 
keep  such  data,  a  request  to  the  balance  clerk  to  give  us 
from  the  proper  balance  sheet  the  purchase  order  numbers 
for  each  purchase  of  this  article  will  enable  us  to  turn  at 
once  to  the  copy  of  the  purchase  order  filed  by  serial 
number.  Similarly  information  covering  delivery  times 
may  be  obtained  from  the  balance  record.  No  attempt 
is  made  here  to  specify  what  shall  and  shall  not  be  kept 
in  each  case,  since  this  is  a  question  to  be  determined  in 
each  instance  and  depends  on  various  factors.  With 
these  records,  however,  or  with  suitable  combinations  or 
substitutes,  any  question  in  regard  to  material,  vendors, 
prices,  or  follow-up  may  be  readily  ascertained. 


CHAPTER  VII 

TRAFFIC,  RECEIVING  AND  INSPECTION 
DEPARTMENTS 

SUMMARY:  Importance — Function  in  General — Place  in  the  Organiza- 
tion— Traffic  Function — Receiving  Function — Inspection  Function — Check- 
ing Invoice  and  Paying  for  Goods. 

Importance. — In  considering  one  after  another  the 
various  departments  upon  which  the  adequacy  of 
material  handling  depends,  there  is  a  temptation  to  say 
as  regards  each  that  its  function  is  "particularly  impor- 
tant." The  statement  in  each  case,  however,  is  literally 
true,  for  as  emphasized  previously  the  material  cycle 
consists  of  interdependent  operations,  a  weak  link  in  any 
one  of  which  may  neutralize  exceptional  carefulness  in 
all  of  the  others.  The  work  of  receiving  and  inspecting 
incoming  materials  is  often  performed  in  a  perfunctory 
manner,  with  the  result  that  we  sometimes  accept  what 
was  not  ordered,  we  pay  for  more  than  was  actually 
received,  or  we  think  some  item  has  not  been  received 
when  it  may  actually  be  on  hand,  or  vice  versa. 

A  case  in  point  may  be  mentioned :  In  one  factory  the 
apparently  harmless  fact  that  the  receiving  department, 
a  large  room  on  the  lower  floor  of  the  storehouse,  had  two 
entrances  instead  of  one,  caused  trouble  until  one  of  them 
was  permanently  locked.  Receiving  customarily  was 
done  through  the  front  entrance,  but  on  one  occasion  a 
strange  driver  left  some  much  needed  material  just 
inside  the  side  entrance,  gave  a  whistle,  and  departed. 
A  frantic  search  some  days  later  revealed  the  parts,  but 
only  after  three  machines  had  been  shut  down  for  2 
days.  All  the  care  in  establishing  limits,  in  accuracy  of 
inventory  and  in  keeping  correct  balance  sheets  is  of  no 
avail  along  side  of  some  of  these  "  tremendous  trifles." 

85 


86  FACTORY  STORESKEEPING 

The  Function  of  Traffic  and  Receiving  Departments.— 
Some  comments  on  the  administrative  relationship  of 
the  Traffic  and  Receiving  Departments  will  be  found 
in  the  next  topic.  Whether  these  two  departments, 
together  possibly  with  packing  and  shipping,  be  concen- 
trated in  one  department  to  whom  each  of  the  men  in 
charge  should  report,  does  not  concern  us  as  regards  the 
general  functions  of  this  part  of  the  process.  For  con- 
venience, traffic  and  receiving  functions  are  summarized 
together,  followed  by  discussion  of  some  of  the  details  of 
the  work  of  each  office. 

The  duties  devolving  upon  these  departments  are  as 
follows : 

1 .  Unload  cars  quickly,  and  check  for  accuracy  of  way- 
bill and  transportation  charges,   and  for  condition  of 
packages. 

2.  Unpack  packages  promptly  and  check  for  amount 
of  goods  actually  received. 

3.  Check  for  quality  of  goods  actually  received  (by 
regular  inspector  when  necessary). 

4.  Notify  the  proper  authority  as  to  unacceptable 
goods. 

5.  Dispose  of  rejected  materials  as  directed. 

6.  See  that  all  goods  delivered  are  properly  recorded, 
notify  the  proper  person  of  receipt,  and  forward  accepted 
goods  as  directed  to  the  store  room  or  elsewhere. 

7.  Report  embargoes  or  other  traffic  upsets. 

8.  Trace   shipments   as   requested,    and   conduct   all 
business  with  the  railroad  or  other  transportation  agents. 

The  various  considerations  necessary  to  making  these 
operations  effective  in  practice  will  be  taken  up  in 
succeeding  pages,  but  before  doing  so  the  general  back- 
ground of  this  work  as  related  to  the  other  departments 
concerned  with  material,  may  be  touched  upon. 

The  Place  in  the  Organization  of  the  Traffic  and 
Receiving  Departments. — In  order  that  the  officials 
charged  with  carrying  out  the  requirements  listed  above 


RECEIVING  AND  INSPECTION  DEPARTMENTS        87 

may  be  free  to  exercise  this  function  to  the  best  advan- 
tage without  vexatious  restrictions  of  red  tape  or  per- 
sonalities on  the  one  hand,  and  with  due  regard  for 
disinterested  supervision  and  sense  of  responsibility  on 
the  other  hand,  it  is  necessary  in  each  case  to  consider 
carefully  just  how  these  functions  are  to  be  lined  up. 

Almost  every  conceivable  arrangement  of  personnel  is 
found  in  practice,  varying  all  the  way  from  those  which 
would  seem  suitable  for  almost  any  business  to  those 
which  unquestionably  are  unsuitable  for  even  the  busi- 
ness where  they  are  in  operation.  In  the  latter  class 
would  fall  cases  where  the  storekeeper  acts  also  in  the 
capacity  of  traffic  manager,  conducting  all  transactions 
with  transportation  agencies,  and  in  the  capacity  of 
receiving  clerk,  opening,  inspecting,  and  recording  all 
goods  actually  received.  This  arrangement  violates  a 
cardinal  principal  of  organization — balance — in  that 
there  is  a  too  great  concentration  of  authority  in  one 
subordinate's  hands  leading  not  only  to  the  possibility 
of  fraud  but  also  to  a  minimum  amount  of  automatic 
checks  in  clerical  errors  or  other  mistakes.  There  is 
ordinarily  no  objection  to  having  both  kinds  of  receiving 
—that  is  receiving  from  the  railroad  in  bulk,  and  the 
receiving  which  constitutes  the  detailed  count — in  one 
man's  hands,  or  in  two  person's  hands  both  of  whom 
report  to  one  man,  since  the  two  operations  deal  with 
distinct  items  in  that  one  is  entirely  in  bulk  and  the 
other  entirely  by  piece.  This  arrangement  is  frequently 
found  and  is  not  nearly  so  bad  as  that  in  which  the  store- 
keeper is  asked  to  perform  all  these  functions. 

An  arrangement  which  has  been  found  satisfactory 
in  numerous  cases  is  to  concentrate  all  inspection  of 
incoming  materials  in  the  engineering  department;  to 
have  the  traffic  manager,  under  whom  falls  bulk  receiving, 
packing  and  shipping,  reporting,  except  in  the  larger 
plants,  to  the  works  manager,  the  storekeeper  being 
also  under  the  works  manager;  while  the  balance 


88  FACTORY  STORESKEEPING 

clerk  is  removed  from  the  influence  of  the  storekeeper 
and  reports  to  the  production  superintendent.  Al- 
though this  arrangement  naturally  is  not  to  be  recom- 
mended indiscriminately  for  all  cases,  it  serves  to 
illustrate  the  breaking  up  of  responsibilities  so  that 
adequate  supervision  and  checks  may  be  provided  for. 
This  arrangement  is  shown  in  the  chart  in  Chap.  Ill, 
page  33. 

The  Traffic  Function. — It  should  be  the  duty  of  some 
one  official  in  the  plant,  who  should  be  held  responsible 
for  the  proper  exercise  of  his  duties,  to  conduct  all 
dealings  with  transportation  agents,  certifying  to 
charges,  unloading  cars  promptly  so  as  to  avoid  demur- 
rage charges,  certifying  as  to  condition  of  packages  upon 
receipt,  keeping  interested  persons  informed  of  the 
traffic  situation  generally,  and  tracing  shipments,  both 
incoming  and  outgoing,  as  requested.  Where  detailed 
receiving  comes  under  traffic,  he  would  also  be  responsi- 
ble for  the  other  activities  listed  at  the  beginning  of  this 
chapter;  these,  however,  are  treated  under  the  receiving 
functions  below. 

The  details  of  the  procedure  in  the  traffic  department 
will  be  touched  upon  only  so  far  as  necessary  to  get  a 
clear  idea  of  its  part  in  the  whole  material  routine  and 
the  duties  here  listed  are  by  no  means  inclusive  of  its 
whole  function.  When  the  car  or  other  load  of  incoming 
goods  arrives  at  the  receiving  platform,  it  is  the  duty  of 
the  traffic  department  to.  unload  all  packages,  reporting 
car  and  seal  number  to  the  traffic  manager.  If  seals  or 
packages  are  broken  or  missing  this  fact  is  noted  and  the 
seal  or  package  number  recorded.  A  record  of  all 
packages  unloaded  is  made  by  the  receiving  crew  fore- 
man. This  record,  or  freight  register,  shows  the  date, 
the  shipper,  the  point  of  shipment,  a  description  of  the 
packages,  with  case  numbers  if  any,  the  weight,  the 
charges  .where  these  are  known,  the  way-bill  number, 
the  car  number  and  initial,  with  time  of  placing,  un- 


RECEIVING  AND  INSPECTION  DEPARTMENTS         89 

loading  and  releasing.  It  may  also  provide  for  notation 
as  to  charges  against  which  cost  of  material  shall  be 
made.  The  original  of  the  freight  register  should  be 
sent  to  the  traffic  manager,  who  may  add  transportation 
charges,  whence  it  goes  to  the  balance  clerk  for  entry  of 
such  charges  on  the  balance  sheet.  It  may  then  be 
returned  to  the  traffic  office  for  filing. 

Similarly,  express  and  parcel  post  matter  as  well  as 
periodic  trucking  charges,  may  be  entered  on  the  freight 
register  if  desired.  Any  claims  for  damages,  shortage, 
and  so  on,  are  taken  up  later  by  the  traffic  manager. 

The  Receiving  Function. — The  general  function  of 
this  department  is  to  unpack  all  packages  and  check 
amount  of  goods  actually  received  against  goods  ordered; 
to  see  that  an  inspection  for  quality  is  made  by  the  proper 
person  in  accordance  with  inspection  instructions;  to 
send  a  notification  of  receipt  to  the  proper  person;  to 
report  upon  unacceptable  goods  and  to  dispose  of  them  as 
directed,  and  to  forward  all  accepted  goods  for  storage  or 
use. 

In  order  that  this  work  may  be  performed  expedi- 
tiously  and  accurately,  it  is  important  that  the  receiving 
clerk  be  furnished  with  a  complete  copy  of  the  purchase 
order.  Some  firms  refuse  to  tell  the  receiving  clerk 
the  quantity  ordered,  but  by  using  a  short  carbon 
above  the  receiving  copy  omit  the  record  of  quantities 
expected  under  the  supposition  that  his  count  will  be  more 
carefully  made,  and  that  there  is  less  chance  for  mistakes 
or  fraud  when  he  has  no  knowledge  whatever  of  the 
quantity  due.  This  practice  in  general  is  not  to  be  com- 
mended. Depending  on  the  type  of  personnel  available, 
and  the  character  of  goods  handled,  there  may  in  some 
instances  be  an  excuse  for  thus  leaving  the  receiving 
clerk  to  work  in  the  dark,  but  ordinarily  a  man  of  proper 
caliber  should  be  secured  for  these  duties,  allowed  to  work 
in  the  most  expeditious  manner  possible,  and  held 
strictly  accountable  through  other  means.  To  avoid 


90  FACTORY  STORESKEEPING 

unnecessary  loss  of  motion  through  a  double  handling  of 
papers  at  both  ends,  he  really  needs  this  information  so 
that  he  may  make  an  immediate  recount,  which  the 
proper  type  of  man  will  make  of  his  own  accord,  in  case 
his  first  count  does  not  agree  with  the  quantity  called  for 
on  the  purchase  order,  without  having  to  report  back  to 
the  purchasing  agent  and  make  the  recount  only  some 
hours  later  after  that  official  requests  it.  He  often  needs 
it  to  identify  each  item  received  with  the  corresponding 
item  on  the  purchase  order,  and  if  inspection  is  to  be 
expedited,  the  quantity  as  shown  on  the  purchase  order 
and  on  the  receiving  slip  should  be  brought  into  agree- 
ment before  goods  are  forwarded  to  the  inspector.  An 
additional  copy  of  the  purchase  order,  furthermore,  must 
be  made  for  the  balance  clerk's  check  of  quantity  ordered 
in  case  the  receiving  clerk's  copy  cannot  be  used  for  this 
purpose.  On  the  other  hand,  the  practice  of  forwarding 
complete  information  must  be  surrounded  with  ample 
safeguards. 

One  of  these  copies  of  the  purchase  order,  then,  should 
be  forwarded  to  the  receiving  clerk,  and  as  indicated, 
this  may,  if  desired,  go  via  the  balance  clerk  for  notation 
on  the  balance  sheet  of  purchase  order  number  and 
amount  ordered,  and  then  be  forwarded  to  the  receiving 
clerk.  In  case  separate  copies  are  furnished  receiving 
and  balance  clerks,  the  balance  clerk  would  file  his 
copy  according  to  vendor  until  notification  of  receipt 
reaches  him,  the  receiving  clerk  filing  his  copy  by  name 
of  vendor. 

Packages  are  delivered  from  the  traffic  department  to 
the  receiving  clerk,  together  with  an  accompanying 
copy  of  the  freight  register  when  it  is  considered  necessary 
to  secure  an  additional  check  by  having  the  receiving  clerk 
see  that  all  bulk  items  on  the  register  are  accounted  for 
—a  precaution  necessary  only  in  very  large  plants.  It  then 
becomes  the  duty  of  the  receiving  clerk  immediately  to 
unpack  each  package,  check  actual  contents  with  his 


RECEIVING  AND  INSPECTION  DEPARTMENTS 


91 


copy  of  the  purchase  order,  and  for  each  purchase  order 
make  out  a  Notification  of  Materials  Received.  This 
notification  must  show  the  name  of  the  vendor,  the 
number  of  the  purchase  order,  the  date  received,  the 
name  or  symbol  of  each  article,  the  quantity  received,  and 
the  quantities  accepted  and  rejected,  the  last  two  items 
being  filled  in  by  the  inspector  where  necessary.  Besides 
the  signature  of  the  receiving  clerk,  therefore,  the  form 
must  provide  for  the  signature  of  whoever  does  the 
inspection,  and  finally,  if  the  notification  is  to  accompany 


SF1AS 
CO. 


NOTIFICATION  OF  MATERIAL  RECEIVED 


On  Purchaie  Order  No.  P_ 
Following  Total  Quantities        


I  have  this  day 
Date 


Storekeeper  or  hta  BepreaeoAatif. 


S*MBOL 


Net  j     yaM..i,y     *     yu»«t,      Weigh,  of       Total  REMARKS 

We'ght      H       Accepted     ~      B«>ct»d         fiejected          Co«t 


I  have  inspected  the  above  material  and  find  them  as  stated 

Signed  . 


I  have  entered  the  accepted  quantities  on  Store  Tags 


Signed 


Storekeeper   or  hit  Represent atjre 


Tf1 


I  ka»e  entered  the  accepted  quantities  on  Balance  Sheets,  including  the  price  $_ 
Freight 

for_  Express       Signed 

Mail  Bal.no.  Clerk 


Plus  $ 


FIG.   13 — Notification  of  receipt. 

the  goods  themselves,  for  the  signature  of  the  storekeeper 
when  goods  are  delivered  to  him.  This  notification  of 
material  received  may  take  any  convenient  form,  and 
for  illustration  Fig.  13  shows  an  example  of  one  found 
satisfactory  under  many  different  conditions. 

The  notification  of  receipt  must  always  be  made  in  at 
least  two  copies,  sometimes  in  more  depending  on  the 
exact  procedure  decided  upon.  If  bin  tags  for  each  item 
are  in  use  in  the  storeroom,  as  I  believe  they  should 
almost  invariably  be,  two  copies  of  the  notice  of  receipt 
will  serve;  one  to  be  sent  immediately  to  the  balance 
clerk,  the  duplicate  to  be  filled  according  to  vendor  in  re- 
ceiving clerk's  file,  and  the  bin  tags  after  being  made  out 


92  FACTORY  STORESKEEPING 

by  the  receiving  clerk  are  forwarded  with  the  goods,  after 
they  have  been  inspected,  to  the  storekeeper  who  must  see 
that  tags  and  materials  agree.  As  goods  are  counted  by 
receiving  clerks  his  copy  of  the  purchase  order  is  checked 
to  show  full  or  partial  receipt,  and  if  shipment  is  com- 
plete for  this  purchase  order  it  is  so  stamped  and  attached 
to  the  original  of  the  notification  of  receipt  and  forwarded 
with  the  goods  to  the  inspector  thence  to  the  balance  of 
stores  clerk;  if  partial  receipt,  it  is  so  checked  and  refiled 
until  the  full  shipment  arrives. 

In  addition,  a  summary  of  receipts  may  be  found  useful. 
A  report  of  all  items  received  is  sent  daily  to  the  purchas- 
ing agent  so  that  he  may  more  quickly  follow  up  his 
outstanding  purchase  orders.  If  this  report  was  not 
made  to  him,  he  would  undoubtedly  get  into  considerable 
difficulty  as  the  copy  of  the  notification  of  material 
received  which  is  eventually  sent  to  him  is  often  held 
up  at  the  balance  cards  for  a  few  days  waiting  for  the 
invoice. 

The  Inspection  Function. — It  is  the  duty  of  the  person 
responsible  for  inspection  to  see  that  all  incoming  goods 
are  suitable  for  the  respective  uses  to  which  they  are  to 
be  put.  The  designation  of  the  quality  of  the  goods, 
where  such  designation  aside  from  trade  names  is 
necessary,  should  and  ordinarily  does  fall  to  the  engineer- 
ing department;  for  that  reason  concentrating  under  the 
authority  of  the  engineering  department  the  final 
determination  of  whether  any  particular  item  conforms 
to  the  original  specification,  is  recommended. 

There  are  two  general  classes  of  specifications :  First,  for 
those  materials  which  it  is  necessary  to  define  in  detailed 
technical  terms  and  which  may  have  to  pass  inspection 
other  than  that  usually  given  to  incoming  material,  or 
which  may  be  subject  to  special  laboratory  tests;  second, 
for  those  materials  for  which  there  exists  well  recognized 
standard  commercial  trade  names  and  qualities.  For  the 
first  class  of  materials,  specifications  must  be  carefully 


RECEIVING  AND  INSPECTION  DEPARTMENTS         93 

drawn  up,  reduced  to  writing  and  rigidly  maintained. 
Judgement,  however,  must  be  exercised  to  prevent  over- 
refinement,  and  care  must  be  taken  to  see  that  some 
special  qualifications  are  not  inserted  when  an  existing 
trade  article  would  as  well  serve  the  purpose.  In  the 
latter  class,  the  standardization  may  often  stop  with  a 
simple  designation  of  a  few  standard  kinds  which  are  to 
be  thenceforth  carried.  Even  in  this  case,  however, 
every  item  and  every  use  should  be  scrutinized  in  an 
effort  to  reduce  just  as  far  as  possible  the  varieties  to  be 
retained.  Upon  such  a  house  cleaning,  it  is  not  uncom- 
mon to  find  the  number  of  varieties  cut  in  half. 

Depending  on  the  type  of  industry,  and  the  resulting 
type  of  materials,  much  of  the  work  of  inspection  can  be 
delegated  to  others;  for  instance,  the  receiving  clerk  can 
inspect  (really  count)  much  of  the  stationery  and  factory 
supplies.  He  should  be  delegated  to  sign  the  inspection 
report  in  the  name  of  the  engineering  department  for  this 
part  of  his  work.  It  is  customary  in  many  plants  to 
put  upon  the  purchasing  agent  the  determination  of 
quality.  Aside  from  the  fact  that  this  places  upon  that 
official  a  function  for  which  the  engineering  or  other 
technical  department  may  reasonably  be  considered 
better  trained  to  perform,  it  has  the  same  objection  that 
entrusting  inspection  of  work  in  process  to  the  foreman 
or  production  superintendent  ordinarily  has,  in  that  it 
is  a  concentration  of  inconsistent  functions  under  one 
head;  the  foreman  and  production  manager  on  the  one 
hand  are  held  for  volume  of  production  and  low  cost; 
the  purchasing  agent  on  the  other  hand  is  held  for 
securing  specified  articles  in  the  specified  time  at  a 
proper  cost.  Although  neither  the  production  nor 
the  purchasing  officials  can  consider  their  work  properly 
done  unless  quality  is  maintained,  it  nevertheless  follows 
that  the  main  part  of  their  attention  must  be  directed 
elsewhere  than  to  quality,  and  that  it  is  leaving  in  the 
hands  of  interested  persons  the  determination  of  a 


94  FACTORY  STORESKEEPING 

factor  upon  which  it  is  difficult  for  them  to  give  an 
unbiased  opinion  where  it  may  reflect  upon  their  own 
competence  in  handling  their  main  function;  in  cases 
of  doubt  they  are  too  likely  to  accept  materials  which 
should  be  rejected.  Inspection  is  often  the  weakest 
link  in  the  material  cycle;  only  by  entrusting  it  to  dis- 
interested officials  operating  under  a  systematic  routine 
may  it  be  brought  to  the  state  of  effectiveness  necessary 
for  strict  material  regulation.  To  insure  systematic 
handling  of  this  important  work  of  inspecting  incoming 
goods  and  definitely  to  fix  responsibility  in  case  of 
delegated  inspection,  the  inspector  may  use  a  rubber 
stamp  which,  when  placed  on  the  receiving  man's  copy  of 
the  purchase  order,  serves  as  a  record  of  the  inspector's 
having  noted  the  order,  as  directions  for  the  man  who  is 
to  make  the  inspection,  and  for  what  kind  of  an  inspection 
is  necessary,  and  serves  to  fix  responsibility  in  case  defect- 
ive materials  are  passed. 

It  is  necessary  not  only  that  inspection  be  done 
thoroughly  and  systematically,  but  that  it  be  done 
promptly.  Losses  in  production  due  to  the  lack  of  the 
necessary  material  on  hand  are  all  too  common.  Losses 
due  to  improper  materials  put  into  work  in  process 
without  inspection  are  alsox  common.  The  longer  the 
time  elapsing  between  receipt  of  goods  and  final  disposi- 
tion in  the  storeroom  or  other  department,  the  more 
chance  there  is  for  confusion  and  for  unnecessary  storage. 
In  case  of  defective  material,  furthermore,  the  vendor 
must  be  notified  within  a  reasonable  time  if  claims  for 
adjustment  are  to  be  entertained.  Everything  consis- 
tent with  thorough  work  should  be  done  to  shorten  the 
time  between  arrival  of  goods  and  completion  of 
inspection. 

Inspection  consists  of  several  types,  differing  consider- 
ably in  the  amount  and  character  of  work  necessary. 
Inspection  for  superficial  surface  defects,  scratches, 
atmospheric  action  and  so  on,  is  of  the  simplest  type 


RECEIVING  AND  INSPECTION  DEPARTMENTS         95 

and  ordinarily  may  be  cared  for  by  the  receiving  clerk. 
The  second  type  of  inspection,  that  of  passing  upon 
quality,  size,  finish,  texture,  color,  and  so  on,  is  usually 
of  a  more  technical  nature,  and  should  be  entrusted  to 
a  representative  of  the  engineering  or  other  technical 
department.  The  third  type  of  inspection,  that  of  the 
determination  of  composition  and  tensile  properties, 
similarly  must  be  left  to  the  technical  department 
through  its  testing  laboratory. 

Similarly  the  time  and  place  of  inspection  may  vary 
according  to  the  circumstances.  Inspection  of  certain 
classes  of  work  may  more  readily  be  made  in  the  maker's 
plant  than  in  our  own  receiving  room.  Thus,  in  the 
maker's  plant  we  may  have  our  own  representative  to 
pass  on  the  quality  of  goods  during  manufacture.  Again, 
such  inspection  may  be  made  at  the  maker's  plant  when 
the  goods  are  finished,  or  samples  may  be  forwarded  to 
our  own  testing  laboratory  before  the  goods  are  shipped 
to  us.  In  cases  where  inspection  is  made  prior  to  receipt 
in  our  receiving  room,  a  certificate  of  inspection  should 
accompany  the  goods,  which  certificate  will  then  be 
attached  to  the  notification  of  material  received  and 
serve  the  same  purpose  as  the  inspector's  signature  on 
the  notice. 

Checking  the  Invoice  and  Paying  for  Purchases. — As 
soon  as  the  notification  of  receipt  has  been  properly 
filled  in  and  signed  by  the  inspector,  the  original  copy 
together  with  receiving  clerk's  copy  of  completed  pur- 
chase order,  should  be  forwarded  as  promptly  as  possible 
to  the  balance  clerk.  Either  before  or  after  the  goods 
themselves  are  actually  received  the  invoice  may  arrive 
at  the  purchasing  agent's  desk.  This  invoice  preferably 
should  be  rendered  in  duplicate,  one  copy  being  sent  by 
the  purchasing  agent  immediately  to  the  auditor  for 
payment  so  as  to  secure  any  cash  discount,  the  other 
copy  going  to  the  balance  clerk.  If  the  copy  of  the 
invoice  arrives  at  the  balance  clerk's  desk  before  the 


96  FACTORY  STORESKEEPING 

notification  of  receipt,  the  invoice  is  filed  by  name  of 
vendor.  In  case  the  notification  of  receipt  arrives  first 
the  entry  as  to  amount  may  be  made  on  the  balance 
sheet  and  actual  issues  against  goods  may  be  made. 
Since  there  is  no  price  available  in  such  cases,  all  such 
issues  have  to  be  held  at  the  balance  clerk's  desk,  upon 
their  return  from  the  storeroom  after  materials  have 
been  disbursed,  for  later  entry  of  issue  price  before  they 
are  finally  forwarded  to  the  cost  department.  This 
allows  one  to  proceed  with  the  work  for  which  the  goods 
are  needed  but  holds  up  the  final  closing  of  the  books  in 
the  cost  department  until  the  invoice  is  received  and 
the  stores  issues  are  priced,  unless  an  estimated  or  standard 
price  be  entered  on  the  issues  so  as  not  to  hold  them  up. 
As  soon  as  both  invoice  and  notification  of  receipt  are 
received  the  balance  clerk  checks  goods  billed  on  the 
invoice  against  goods  receipted  for  on  the  notice  of 
receipt,  returns  duplicate  invoice  to  purchasing  agent 
for  adjustment  in  case  of  discrepancy  in  amounts,  enters 
the  actual  amount  in  the  received  column  of  the  balance 
sheet,  adds  transportation  charges  (obtained  through 
the  freight  register)1  to  the  invoice  price  and  obtains 
new  unit  price  for  issue.  Any  stores  issues  for  goods 
previously  issued  may  then  be  withdrawn,  priced  and 
forwarded  to  the  cost  department.  The  notification  of 
receipt  and  receiving  copy  of  purchase  order,  together 
with  duplicate  invoice  should  then  be  immediately  for- 
warded to  the  purchasing  agent  who  should  independ- 
ently check  all  invoices  and  notices  of  receipt.  Notation 
of  all  adjustments  or  other  transactions  with  the  vendor 
should  be  made  on  copy  of  purchase  order  filed  in  the 
purchasing  agent's  file  by  serial  purchase-order  number. 
The  receiving  clerk's  copy  of  purchase  order  may  then 
be  forwarded  to  the  auditor  (with  or  without  notification 
of  receipt,  as  seems  desirable),  but  finally  the  original 

1  Monthly  bills  for  trucking  charges  may  either  be  carried  through  the 
freight  register,  or  taken  to  an  overhead  account. 


RECEIVING  AND  INSPECTION  DEPARTMENTS         97 

notification  of  receipt  together  with  receiving  copy  of 
purchase  order  and  duplicate  invoice  are  filed  in  the 
purchasing  agent's  office  by  name  of  vendor.  In  case 
we  are  dealing  with  vendors  where  we  are  not  sure  that 
satisfactory  adjustment  will  be  readily  made,  it  is  neces- 
sary, of  course,  to  hold  voucher  for  payment  of  invoice 
till  notification  of  goods  actually  received  has  arrived. 


CHAPTER  VIII 

THE  STORE  ROOM— LAYOUT,  EQUIPMENT  STOWAGE 
AND  PROTECTION.     MAINTENANCE  STORES 

SUMMARY:  General  Requirements — Layout:  Location  and  Responsi- 
bility. Centralization  vs.  Decentralization.  Responsibility.  Depart- 
mental Supplies.  Arrangement.  Indexing. — Equipment :  Racks  and 
Bins.  Double  Binning.  Minor  Equipment — Stowage:  Definitions. 
Rules  for  Stowage — Protection:  Fire  and  Explosion.  Rust.  Deteriora- 
tion. Pilfering.  Maintenance  Stores:  Supplies  and  Spare  Parts.  Tools 
and  Fixtures. 

As  is  true  of  most  other  phases  of  material  handling, 
the  details  of  the  arrangement  and  operation  of  the 
store  room  must  naturally  be  developed  to  meet  local 
needs.  The  store  room,  however,  serves  the  same 
purpose  in  the  factory  that  the  bank  vault  does  in  the 
storage  and  safeguarding  of  money,  and  no  material 
procedure  can  be  considered  complete  unless  a  thorough 
study  of  needs  as  regards  the  store  room  has  been  made 
and  unless  its  operation  has  been  systematically  tied 
into  the  rest  of  the  routine.  » 

The  requirements  for  the  storage  of  different  materials 
in  different  types  of  industry  may  vary  tremendously. 
Thus,  in  some  cases  much  material  may  be  stored  in 
the  open  and  under  such  conditions  it  would  be  money 
wasted  to  build  a  house  for  its  accommodation.  Other 
supplies  may  be  stored  out-of-doors  provided  a  roof  be 
erected  to  keep  rain  and  snow  from  coming  into  direct 
contact  with  the  material.  In  other  cases,  however, 
adequate  housing  must  be  provided  if  losses  are  to  be 
guarded  against,  and  it  is  with  particular  reference  to 
this  latter  class  of  goods  that  the  following  remarks 
apply,  although  the  problems  of  storage  outside  or  inside 
are  in  many  respects  similar. 


THE  STORE  ROOM  99 

Layout. — Location  and  Responsibility. — In  considering 
the  physical  location  of  the  one  or  more  store  rooms 
which  may  be  necessary  and  the  responsibility  for  the 
operation  of  each  one,  a  great  many  different  things  have 
to  be  taken  into  account.  On  the  one  hand,  the  obvious 
benefits  of  centralization  in  one  storage  place  have  got. 
to  be  weighed  carefully  against  the  offsetting  cost  of 
transportation  and  the  often  less  efficient  service  to  the 
departments  where  materials  are  needed  if  complete 
centralization  is  in  effect.  A  careful  study  of  floor  plans 
and  of  the  paths  of  travel  of  materials  must  be  made  to 
give  the  best  location,  all  things  considered,  for  the  store 
room,  and  at  best  in  any  large  factory  this  question  is  a 
perplexing  one. 

Somewhat  akin  to  the  foregoing  considerations  are 
those  affecting  the  determination  of  whether  raw  materi- 
als and  partly  worked  or  finished  parts  are  to  be  stored 
in  the  same  room.  Are  factory  supplies,  furthermore, 
such  as  clean  cotton  waste,  oils,  lubricants  etc.,  to  be 
kept  in  the  same  store  room  with  raw  materials?  Are 
special  stores  used  only  in  one  department  to  be  stored 
in  or  contiguous  to  that  department  or  in  the  central 
store  room?  If,  through  considerations  of  service  to  the 
departments  concerned,  departmental  supplies  are  to 
be  stored  in  the  department,  how  is  accurate  control  of 
inventory  and  of  receiving  and  issuing  in  general,  to  be 
obtained  ?  On  the  other  hand,  if  such  supplies  are  to  be 
kept  in  the  central  store  room  because  of  concentration 
and  more  accurate  control  possible  through  such  arrange- 
ment, how  is  the  procedure  to  be  arranged  so  that  service 
to  departments  be  not  sacrificed? 

The  same  questions  arise  as  to  the  storage  and  respon- 
sibility of  spare  parts  for  machines  and  for  all  the 
miscellaneous  items  of  supplies  used  in  the  maintenance 
department.  Since  the  latter  department  is  itself  strictly 
a  service  department  for  the  whole  establishment,  very 
careful  consideration  must  be  given  to  the  storage  and 


100  FACTORY  STORESKEEPING 

handling  of  maintenance  supplies  so  that  this  department 
and  therefore  the  rest  of  the  plant  may  not  be  handi- 
capped through  restrictions  in  the  material  supply. 

One  may  not  safely  generalize  in  answer  to  such 
questions.  On  the  other  hand,  however,  there  are 
certain  considerations  which  must  not  be  overlooked 
in  the  answer  to  any  one  -of  them  under  given  conditions, 
and  the  following  observations  may  assist  in  avoiding 
some  of  the  mistakes  frequently  encountered  in  practice 
because  of  superficial  attention  to  the  various  points 
involved. 

Centralization  vs.  Decentralization. — There  are  many 
undoubted  advantages  of  centralizing  the  storage  of 
all  materials  in  one  place.  Serious  consideration,  par- 
ticularly in  small  and  medium-sized  plants,  should 
given  to  this  possibility.  '  Foremost  among  these  advan- 
tages is  that  of  being  able  to  fix  responsibility  for  all 
functions  which  a  store  room  is  supposed  to  perform. 
Supervision  under  such  circumstances  may  be  much 
more  easily  obtained  and  of  a  stricter  and  more  detailed 
nature  than  is  possible  with  scattered  storage.  Inven- 
tory,  furthermore,  may  ordinarily  be  kept  not  only 
more  accurately  but  also  at  a  lower  figure  through  the 
avoidance  of  the  duplication  almost  inevitable  with 
several  store  rooms.  Better  space  utilization  may,  for 
the  same  reason,  be  secured,  and  clerical  help  needed  in 
store  room  attendance  and  in  balance  sheet  and  all 
other  clerical  operations  may  be  lessened. 

As  opposed  to  these  advantages  are  the  disadvantages 
o^Zadditional  transportation  and  AAess  intimate  knowl- 
edge of  local  departmental  needs  and  customs  on  the 
part  of  the  central  storekeepers. 

Responsibility. — Whether  centralized  or  decentralized 
storage  is  decided  upon,  the  responsibility  for  all  receipts 
into  stores,  storage,  custody  while  in  stores,  and  issue 
from  stores,  should  be  strictly  centralized.  If  there  are 
subsidiary  store  rooms,  they  should  be  all  definitely 


THE  STORE  ROOM  101 

placed  under  the  supervision  of  a  head  material  man  for 
the  whole  establishment.  In  no  other  way  can  the 
uniformity  in  practice  necessary  to  strict  control  be 
secured.  There  may  be  one  storekeeper  required  on 
full  time  for  each  subsidiary  store  room,  possibly  more, 
but  all  of  the  storekeepers  and  assistants  should  look  up 
to  one  man,  who  in  turn  is  held  responsible  by  the 
manager  for  the  upkeep  of  the  whole  material  end  of  the 
business.  Just  so  far  as  possible  the  same  routine  in 
receiving,  accounting  for,  and  issuing  materials  should  be 
followed  throughout  all  store  rooms. 

Departmental  Supplies. — In  general  it  has  been  my 
experience  that  whether  we  have  departmental  store 
rooms  from  which  articles  are  issued  to  the  workplace, 
or  whether  we  have  no  departmental  stgre  room  but 
everything  centralized,  the  best  way  to  handle  depart- 
mental supplies  is  to  issue  to  the  department  (whether  to 
the  workplace  itself  or  to  the  subsidiary  departmental 
store  room)  only  enough  supplies  to  last  a  reasonable 
length  of  time,  say  from  one  to  two  weeks,  the  main 
reservoir  of  material  for  this  department  being  retained 
in  the  central  store  room.  Depending  furthermore  upon 
the  type  of  material  used  in  the  department,  after 
supplies  have  been  forwarded  from  the  central  store  room 
no  further  paper  records  of  the  transaction  are  necessary 
when  these  supplies  are  put  to  use;  for  instance,  nails, 
bolts,  tacks,  and  similar  articles  may  be  issued  to  the 
department  in  considerable  quantities,  being  charged  at 
the  time  simply  to  departmental  supplies  and  issued 
thereafter,  without  additional  paper  work,  to  the  work- 
men as  needed.  Or,  where  it  is  desirable  from  a  cost- 
finding  standpoint  to  charge  each  job  with  its  exact 
amount  of  material  used,  it  is  necessary  to  require  a 
store  issue  for  each  lot  of  material  furnished.  In  this 
case  the  original  stores  issue  made  out  when  the  materials 
were  transferred  from  the  central  to  the  departmental 
store  room  may  serve  simply  as  records  for  the  balance 


102  FACTORY  STORESKEEPING 

sheet,  and  the  stores  issues  made  out  in  the  department 
when  goods  are  issued  to  specific  orders  form  the  basis  of 
cost  records.  Additional  discussion  of  this  question  will 
be  found  at  the  end  of  this  chapter  under  Maintenance 
Stores. 

The  important  point  in  this  connection,  however,  is 
that  a  simple  yet  sufficient  procedure  be  worked  out  and 
standardized  to  the  end  that  responsibility  may  not  be 
lessened  through  having  as  many  different  " systems"  as 
there  are  persons  concerned  with  the  handling  of 
materials. 

Arrangement. — The  requirement  of  the  store  room  as 
regards  varieties  of  articles  to  be  stored  and  therefore  as 
regards  the  size  and  exact  arrangement  of  aisles,  bins, 
and  other  store  room  equipment,  are  so  varying  that  it  is 
out  of  the  question  to  indicate  any  arrangement  which 
will  be  best  under  all  circumstances.  Some  general 
points  in  regard  to  the  arrangement  of  the  store  room 
will  be  discussed  before  the  question  of  equipment  is 
taken  up  in  detail. 

The  location  and  layout  of  a  store  room  is  in  many 
respects  analogous  to  the  location  and  layout  of  a  modern 
city.  When  the  location  is  decided  upon,  after  taking 
into  consideration  maximum  accessibility  to  the  various 
lines  of  travel,  it  is  necessary  to  have  an  internal  lay- 
out which  will  best  serve  the  needs  of  the  travel  and  the 
general  convenience  of  articles  to  be  accommodated. 
In  the  store  room  there  must  be  a  definite  and  prefer- 
ably only  one  point  of  ingress  for  all  material.  There 
must  be  provided  broad  avenues  for  the  heavy  traffic 
back  and  forth  from  the  various  "streets,"  and  a  sys- 
tematic method  of  numbering  racks  and  bins  is  just 
as  necessary  as  in  numbering  streets  and  houses,  and  it 
should  be  just  as  easy  for  a  stranger  in  the  store  room 
to  find  a  given  item  by  knowing  its  inclex  location  as  it 
would  be  for  him  to  find  a  particular  mom  number  in  a 
given  house  number  on  any  street  in  a  city.  Adequate 


THE  STORE  ROOM  103 

provision  must  be  made  for  plenty  of  receiving  and 
unpacking  room,  for  office  space,  and  for  all  auxiliary  equip- 
ment needed  in  the  transaction  of  business.  Adequate  ' 
protection  must  be  insured  through  the  exclusion  of 
combustible  material,  through  sprinklers,  fire  extinguish- 
ers and  similar  measures,  and  through  all  other  pre- 
cautions against  damage  by  fire,  and  means  must  be- 
taken to  see  that  unauthorized  persons  be  excluded 
from  the  store  room,  and  that  the  whole  place  be 
adequately  lighted  and  heated.  Cleanliness  and  neatness 
are  imperative. 

After  information  covering  these  numerous  points  has 
been  collected,  and  after  the  requirements  in  kinds  and 
amounts  of  store  room  equipment  have  been  determined, 
the  actual  process  of  arranging  all  of  these  in  proper 
relation  begins.  For  this  purpose,  accurate  floor  plans, 
on  a  scale  of  one  inch  equaling,  say,  10  feet,  should  be 
prepared  on  which  are  carefully  located  all  permanent 
obstructions  such  as  columns,  stairways,  elevator  shafts 
and  the  like,  as  well  as  all  windows  and  doorways.  On 
the  same  scale  on  another  tracing,  so  that  templates  may 
later  be  cut  out,  are  drawn  plan  views  of  each  different 
kind  of  equipment  to  be  used,  such  as  standard  racks  and 
bins,  bar  stock  racks,  belting  racks,  trucks  and  all  other 
movable  apparatus.  As  many  templates  of  each  of  these 
should  be  provided  as  there  are  actual  pieces  of  each  to 
be  used.  On  floor  plans  showing  permanent  obstruc- 
tions, these  templates  are  arranged  tentatively  and  held 
in  place  by  pins,  being  shifted  experimentally  to  obtain 
finally  the  best  possible  arrangement.  Necessary  width 
of  aisles,  and  location  of  equipment  relative  to  windows 
must  be  carefully  considered,  the  general  object  of  course 
being  to  get  maximum  equipment  suitably  arranged  in 
minimum  floor  space.  A  little  ingenuity  in  arrangement 
will  often  save  many  square,  feet  of  floor  space. 
When  the  final  layout  has  been  worked  out  on  paper,  the 
templates  may  be  securely  fastened  to  floor  plans  and 


104 


FACTORY  STORESKEEPING 


this  paper  layout  used  as  a  basis  for  the  actual  moving. 
The  transition  from  the  existing  to  the  new  arrangement 
may  then  actually  occupy  as  long  or  as  short  a  time  as 
seems  desirable  to  prevent  disrupting  continuous  and 
effective  service  to  the  shop. 

Indexing. — Figure  14  illustrates  a  method  of  index- 
ing which  will  be  found  convenient  under  many  conditions. 


A II II ILUL 


/T 


5      5 


1 


FIG.  14. — Indexing  method  to  give  flexibility  in  case  of  rearrangement  of 

store  room. 

It  will  be  noticed  that  the  following  general  principles 
are  taken  into  consideration : 

1.  Use  letters  and  numbers  alternately. 

2.  Use  letters  for  those  things  of  which  there  are  fewest 
to  designate  (different  buildings,  different  portions  of 
the  store  room,  different  rows  of  racks  along  shortest 
dimensions,  etc.). 

3.  Use  numbers  for  those  things  of  which  there  may  be 
many  to  designate   (Number  of  store  room,   different 
rows  of  racks  along  longest  dimensions,  etc.). 

4.  Start   lettering   and   numbering   from   permanent 
obstructions  and  floors  and  proceed  outward  and  upward 


THE  STORE  ROOM  105 

in  lines  of  probable  expansion.  This  allows  the  addition 
or  elimination  of  racks  and  bins  on  the  end  or  on  top 
without  confusion  due  to  vacant  designations  for  missing 
positions. 

Thus  the  shaded  area  in  Fig.  14  represents,  in  plan, 
the  area  occupied  by  one  section  of  a  standard  rack, 
corresponding  to  one  house  of  several  stories  on  a 
street.  Its  index  is  B  3  C  (side  B  of  the  store  room, 
row  3  down  the  main  aisle,  row  C  out  from  the  wall). 

This  rack  may  be  four  stories  high,  then  the  location 
of  an  article  in  a  bin  in  the  second  story  from  the  floor 


FIG.  15.— Bin  label. 

would  be  B  3  C  2.  It  is  well  to  have  such  designation 
on  the  bins  themselves;  and  on  the  balance  sheet  for 
each  article  of  material,  the  location,  in  case  it  is  reason- 
ably permanent,  should  be  entered.  Where  locations 
are  constantly  changing  it  may  not  be  practicable  to  keep 
the  balance  sheets  posted  for  locations,  but  the  per- 
manent index  should  be  on  the  bin  and  the  storekeeper 
required  to  keep  a  current  card  file  showing  just  where 
each  article  may  be  found,  so  that  a  new  man  can 
immediately  locate  any  article  in  the  room. 

Where  a  good  system  of  stores  and  worked  material 
symbols  is  in  use,  it  will  often  be  found  that  the  most 
satisfactory  method  of  storage  is  alphabetically  by 
symbol  (see  Chap.  IX  on  Classification).  With  standard 
interchangeable  racks  and  bins  such  arrangement, 
particularly  in  the  metal-working  store  room,  is  easily 
maintained,  and  aside  from  the  symbols  which  are  with 
and  identify  each  article  no  other  indexing  scheme  is 
necessary  although  even  in  this  case  a  card  index  of 


106  FACTORY  STORESKEEPING 

location  by  name  of  article  is  often  good  insurance 
against  lost  time  on  the  part  of  a  new  attendant  or  where 
the  symbol  does  not  appear  on  the  issue  slip.  With 
mnemonic  symbols,  however,  the  symbol  of  one  item 
may  be  SV-SS,  the  next  SV-ST,  the  next  SV-SW  and  so 
on.  Each  of  these  items  would  be  placed  alphabetically 
in  the  bins  exactly  as  their  symbols  would  appear  in  a 
dictionary  and  when  the  symbol  appears  on  the  issue 
slip  the  attendant  may  readily  locate  the  article  called 
for.  Such  a  systematic  arrangement  by  symbol  is  not 
always  possible  for  all  items  nor  desirable  for  all  portions 
of  the  room,  however,  and  common  sense  must  govern  in 
assigning  locations  and  indexing.  It  would  be  foolish, 
if  not  impossible,  to  store  bar  stock  in  long  lengths 
between  screws  and  nuts,  for  instance,  just  because  its 
symbol  might  fall  between  the  symbols  of  these  articles, 
nor  would  one  logically  store  heavy,  much  used  castings 
away  back  from  the  door  or  elevator.  Exceptions  can 
readily  be  made  in  such  cases  without  destroying  the 
advantages  of  storage  by  symbol  where  this  seems 
otherwise  desirable.  In  such  cases,  the  rows  of  racks, 
the  individual  racks  themselves,  and  the  separate 
compartments  within  each  rack  must  be  numbered  and 
lettered  with  a  cross  index  for  each  item,  according  to 
some  such  definite  plan  as  that  outlined. 

Equipment. — Racks  and  Bins. — The  prime  requisite 
as  regards  the  equipment  of  any  store  room  is  flexibility. 
It  is  impossible  to  foresee  all  the  ups  and  downs  of  inven- 
tory, the  exact  space  required  for  different  articles,  the 
best  arrangement  and  placing  of  each  item  to  be  stored. 
Continual  rearrangements,  particularly  in  individual 
racks  and  bins,  are  desirable  or  necessary  in  most  store 
rooms,  and  not  infrequently  the  whole  store  room  must 
be  picked  up  bodily  and  moved  to  another  location. 
The  ease  with  which  such  changes  may  be  made  depends 
directly  upon  the  character  of  the  racks  and  bins  used. 

The  ideal  store  room,  other  things  being  equal,  would 


THE  STORE  ROOM  107 

be  one  on  wheels.  This  being  impracticable  in  most 
cases,  the  next  best  thing  is  to  have  only  movable,  inter- 
changeable storage  units  just  so  far  as  possible.  Racks 
and  bins  should  very  seldom  be  built-in  or  permanently 
attached  in  any  way  to  floor,  walls,  or  ceilings,  but  on 
the  contrary  should  consist  of  standard  racks  of  appro- 
priate size  which  may  serve  as  shelves  where  no  bins  are 
required,  and  which  in  such  cases  may  be  constructed 
without  backs  and  so  placed  as  to  give  shelves  double  the 
width  of  each  rack.  Into  all  standard  racks,  however, 
must  fit  interchangeably  individual  bins  just  as  one  file 
drawer  may  be  swapped  with  another  in  a  block  of 
uniform  letter  file  cabinets.  The  dimensions  of  the 
racks  do  not  matter  so  long  as  a  suitable  and  convenient 
standard  be  determined  upon  and  adhered  to,  and 
similarly  the  bins  or  individual  storage  compartments 
which  fit  into  these  racks  may  be  of  various  shapes  and 
dimensions  as  long  as  any  bin  or  serviceable  combination 
of  bins  may  be  fitted  into  any  standard  rack.  The  racks 
illustrated  in  the  following  drawings  each  have  main 
divisions  24J^  in.  square  by  18H  in.  front  to  back 
inside  dimensions,  and  the  bins  are  correspondingly 
dimensioned  to  fit  with  ample  play  into  these  racks  in 
various  combinations,  and  are  typical  of  those  commonly 
used  in  metal-working  store  rooms.  The  exact  dimen- 
sions are  unimportant,  however,  and  I  know  of  one 
satisfactory  arrangement  where  the  main  divisions  of 
such  racks  are  36  inches  on  all  inside  dimensions,  with 
bins  to  correspond.  In  some  instances  packing  cases 
may  be  used^for  racks,  with  similarly  cheap  construction 
for  the  bins;  sturdy  construction  is  necessary,  however, 
where  heavy  articles  are  stored. 

Figure  16  shows  a  standard  wooden  rack,  which  may 
be  four  or  more  stories  high  by  two  wide,  the  inside 
dimensions  of  each  story  being  24^  in.  wide,  24J^  in. 
high  and  18}^  in.  deep. 

These  racks  form  the  storage  space  for  the  whole  store 
room  for  all  binned  items,  or  the  racks  without  bins  or 


108 


FACTORY  STORESKEEPING 


backs  may  be  used  where  this  is  desirable.  Into  any 
story  of  any  such  rack  may  be  fitted  the  individual  bins 
shown  in  Figs.  17  to  21.  Thus,  one  story  or  compart- 
ment may  contain  one  bin  #1  (Fig.  17) ;  another  compart- 
ment two  bins  #4  (Fig.  19);  another  two  bins  #5  (Fig. 

0  12"  24"  36" 


h£           * 

-.                                       i 

x  ^ 

A             *  * 

V         v 

J 

'Partition  for 
^       using  Bin  #13 
~^j>i  as  a  drawer 

\       Y 

-£- 

i                                            1 

<-  24*"-  -> 

<-*--^--  —  -> 

<--'/"            'I- 

y 

^ 

A 

^ 

T     T~ 


42 


I 


_y_    ^_ 


FIG.   16. — Drawing  of  standard  rack  into  which  fit  interchangeably  separate 
bins  as  illustrated  in  Figs.  17  to  21. 

20);  another  one  bin  #5  and  two  bins  #8;  while  another 
will  accomodate  eight  bins  #10,  and  so  on.  A  typical 
arrangement  is  shown  in  Fig.  22. 

The  advantage  of  such  equipment  is  obvious.  Not 
only  may  the  whole  rack  with  bins  be  picked  up  and 
removed  to  a  new  location,  but  as  is  more  often  necessary 
any  one  of  these  bins  with  or  without  its  contents  may  be 


THE  STORE  ROOM 


109 


pulled  out  and  replaced  by   a  different   arrangement. 
Thus,  double  bin  5,  for  example,  which  now  accommodates 


Capacity-  4.85Cu.Ft.perBin 
No.per  Compartment- 1 
Materi'al  -  Poplar 
Nails  -  Cement  or  ffesm  Coatee/ 


0   2"  4"  6"  fl"  }()" 


ft" 

FIG.   17. — Bin  No.  1.     One    such    bin    occupies    one    compartment    of    the 
standard  rack  shown  in  Fig.  16. 


Capaafy-?.35Cu  Ft  per  Bin 
No.per  Compartment- 1 
Material  -  Poplar 
Nails  -  Cemen  r  or  Ros/n  Coated 


1 

<-f^     I 

4 

<-3-"      f'-> 

<« 

^  I 
| 
1 
^                   1 

^^ 

\. 

1 
1 
1 

1 

i 

f 

Y 

Y 

*  ', 

0  e"  4"  6"   8"  10" 


A     I 

%>t                   5-> 

4- 

- 

<-}"     ' 

V 

'--..:..  i7$".._. 

FIG.  18. — Bin  No.  2.     This  is  bin  No.  1  divided  in  the  middle  for  double- 
binning  purposes. 

about   500    %   by  2   in.   carriage  bolts  in   each  half, 
may  be  insufficient  when  it  is  decided  to  raise  the  limits 


110 


FACTORY  STORESKEEPING 


Capacity-  2.25  Cu. Ft.  per  Bin 
No.per  Compartment  -  2 
Material-  Poplar 
Nails  -  Cement  or  ffoj/'n  Coated 


0  2"  4"  6"  8"  10" 


V 

* 

*A 

/-> 

•s 

-> 

Y 

K  v 

1 

*  /' 

'*--.. 

FIG.  19. — Bin  No.  4.  Two  such  bins  will  occupy  one  compartment  of  the 
standard  rack  shown  in  Fig.  16.  Or  one  of  these  and,  say,  two  bins  No.  8 
(Fig.  21)  may  be  used  in  one  compartment. 


Capacity  -  1. 08  Cu.  Ft.  per  Bin 
No.  per  Compartment  -  2 
Material  -  Poplar 

ils  ~  Cement  or  Rosin  Coated 


0  ?"  4"  6"  8" 10" 


1      j  //     ^  A  J7/~ 

U- 

<^ 

^ 

k-  //'-•--> 

, 

i 

^ 

Y                  1  1 

Y 

A 

\ 
i 
i 

K-—  "    * 

1                "y 

V-  --n 

/"  > 

FIG.  20. — Bin  No.  5.     This  is  bin  No.  4  divided  in  the  middle  for  double- 
binning  purposes. 


Capacity  -  0. 56  Cu.  Ft.  per  Bin 
No. per  Compartment-  4- 
Material  -Poplar 
Nails  "Cement  or  Rosin  Coated 


0    2"  4"   6H  8"  10" 


i 

^ 

<--       ^-> 

t-^.C 

A 

^               ^ 

1 

IV 

1 
1 

1 

-^                 V 

*^* 

k—  *—  /,? 

x/-  > 

I 

^_._.j:___/7j^  

FIG.  21. — Bin  No.  8.  Four  such  bins  will  occupy  one  compartment  of  the 
Standard  Rack  shown  in  Fig.  16.  Or  various  other  bins  may  be  used  with 
this  one  in  the  same  compartment. 


THE  STORE  ROOM 


111 


on  this  item  to  store  say  twice  as  many  as  heretofore. 
In  this  case  either  one  double  bin  2  or  two  single  bins  4 
may  be  used,  and  usually  a  slight  rearrangement  of  bins 
will  enable  the  storekeeper  to  use  one  whole  compartment 


Birf9\ 


Bin*! 


Bin  #5 


Bin  #2 


dm*  I 


12" 


24-" 


Bin  #10 


Bin  #10 


dm  #4 


Bin 


Bin 


FIG.  22. — Typical  arrangement  of  various  interchangeable  bins  in  one 
standard  rack.  Many  other  combinations  are  possible,  so  that  rearrange- 
ment of  storage  units  is  an  easy  matter. 

of  the  rack  so  that  all  of  this  size  bolts  will  be  kept 
together  in  adjacent  bins. 

In  many  store  rooms,  due  to  the  inflexibility  of  equip- 
ment, such  rearrangement  would  be  made  only  with  the 


112 


FACTORY  STORESKEEPING 


(Courtesy  Universal  Winding  Co.) 
FIG.  23. — Standard  rack  with  interchangeable  bins. 


(Courtesy  Universal  Winding  Co.) 
FIG.  24. — Storage  of  bar  and  plate  stock. 


THE  STORE  ROOM  113 

greatest  difficulty,  if  indeed  it  would  even  be  attempted. 
More  commonly  the  increased  supply  would  be  dumped 
into  some  vacant  bin  not  within  speaking  distance  of  the 
existing  supply,  thereby  increasing  the  troubles  of  the 
storekeeper.  Only  through  interchangeable  storage 
units  may  all  of  each  different  item  be  kept  together 
without  excessive  space  reserve. 

Installation  and  proper  operation  of  such  equipment 
has  been  known  to  cut  down  by  more  than  half  the 
amount  of  storage  space  required  for  a  given  number  of 
articles.  The  reason  for  this  is  readily  seen.  Under 
most  conditions  of  storage,  where  rearrangements  are 
not  easily  made,  the  storekeeper  plays  safe  by  leaving 
quantities  of  vacant  space  in  which  additions  to  stock 
may  be  absorbed.  It  is  the  exception  where  the  garden 
varieties  of  bins  are  found  more  than  half  filled,  with 
the  result  that  space  utilization  is  only  50  per  cent  of 
what  it  should  be.  The  waste  of  head  room,  moreover, 
is  frequently  enormous.  With  racks  and  bins  of  the 
type  described,  however,  the  storekeeper  may  fill  each 
bin  completely,  knowing  that  with  the  contracting  and 
expanding  requirements  of  the  business  he  can  readily 
shift  bins  to  meet  current  needs,  keep  all  of  any  one  item 
together,  secure  maximum  space  utilization  and  largely 
prevent  " overflow"  bins. 

Occasions  arise,  however,  where  overflow  bins  should 
be  used  rather  than  undertake  the  rearrangement  neces- 
sary to  provide  for  out-of-the-ordinary  expansion. 
When  it  is  known  that  the  'increase  in  amount  to  be 
carried  is  temporary,  the  permanent  storage  space  may 
be  completely  filled  and  the  temporary  excess  placed 
in  an  overflow  bin  (which  may  be  simply  an  extra  supply 
of  these  standard  racks  and  bins  left  vacant  for  the 
purpose)  located  at  any  convenient  point.  In  this  case 
a  cross-reference  overflow  bin  tag  (see  Fig.  25,  page  114) 
on  the  permanent  bin  tells  the  location  of  the  overflow  bin 
for  that  item,  and  on  the  overflow  bin  the  regular' bin  tag 
(Fig.  30,  page  119)  is  placed.  No  bin  tag,  but^only  the 


114 


FACTORY  STORESKEEPING 


cross-reference  tag,  should  be  on  the  permanent  bin,  and 
no  issues  must  be  made  from  this  bin  as  long  as  the  other 
is  in  use,  so  as  to  insure  that  all  issues  be  made  from  the 
excess  (overflow)  stock  in  order  that  it  will  be  disposed 
of  first,  releasing  this  space  and  leaving  eventually 

only  the  permanent  bin  to  be 
looked  after.  The  only  excep- 
tion to  this  procedure  would  be 
where  the  material  is  subject 
to  deterioration  and  the  over- 
flow (usually  the  most  recent 
shipment  received)  must  there- 
fore wait  until  the  older  ship- 
ments have  been  used  up. 

Except  where  requirements 
may  be  very  accurately  fore- 
told it  is  best  not  to  plan  in  the 
original  layout  of  the  racks  and 
bins  on  using  every  bin  of  every 
rack,  but  a  vacant  bin  or  com- 
partment at  regular  intervals 


CROSS  REFERENCE  CARD 
FOR  BALANCE 


SYMBOL 


See  lag  in  bin 


FIG.  25.— Overflow  cross-refer-  .     . 

encebintag.     This  card  is  placed    should  be  lelt.        IhlS  IS  IOr  the 
on    the    regular  issuing  bin,  and 
refers  the  storekeeper  to  location 
of  overflow  stock  which  must  be 
disbursed  first. 


nf    rrmldncr   rparrano-p 

nlents    more    easily    through 

,  .,.,  ,.,.  .-•  . 

the  ability  to  utilize  this 
space  in  case  a  bad  guess  is  made  or  in  case  increased 
room  for  one  or  more  articles  becomes  necessary.  Just 
what  proportion  of  space  should  be  left  depends  on  the 
accuracy  with  which  needs  may  be  and  have  been  pre- 
determined and  on  the  room  available  for  storage; 
ordinarily  one-half  of  one  compartment  of  every  standard 
four-story  rack  (Fig.  16,  page  108)  is  sufficient  with  reason- 
ably careful  original  layout.  This  is  equivalent  to  a  space 
reserve  of  6  per  cent  —  much  less  than  is  usually  found 
necessary  where  flexibility  in  equipment  is  not  provided. 
The  racks  and  bins  here  illustrated  are  made  of 
wood. 


THE  STORE  ROOM 


115 


116 


FACTORY  STORESKEEPING 


THE  STORE  ROOM  117 

Depending  upon  the  type  of  material  to  be  stored, 
various  other  types  of  racks  and  bins  may  be  found 
serviceable.  For  instance,  the  hopper  bin  illustrated 
in  Fig.  26  (page  115)  has  been  found  useful  in  some  cases, 


FIG.  28. — Vertical  stowage  of  lumber  in  sizes  up  to  2  by   12  in.  by  16  ft. 

and  of  course  for  handling  bar  stock,  castings,  barrels  and 
such  non-binned  items,  suitable  storage  facilities  would 
have  to  be  provided  in  addition  to  the  standard  racks  and 
bins  described. 


118 


FACTORY  STORESKEEPING 


It  may  be  well  at  this  point  to  mention  the  advisability 
of  providing  a  " morgue"  or  definite  storage  place  for 
semi-obsolete  material  which  it  is  not  desired  to  keep 
with  the  active  items.  This  may  be  a  special  part  of 
the  regular  store  room  devoted  to  the  purpose,  or  a 
separate  room  may  be  provided  where  less  attention 
need  be  given  to  systematic  arrangement,  storage,  and 
handling.  The  same  sort  of  provision  for  temporary  stor- 
age of  strictly  departmental 
and  personal  articles  has  been 
found  extremely  useful  in 
keeping  the  departments  clean 
and  at  the  same  time  provid- 
ing a  definite  and  known 
storage  place  for  all  such 
miscellaneous  articles. 

Metal  Racks. — There  is 
little  question  that  racks  and 
bins  constructed  of  metal 
offer  many  possible  advan- 
tages over  wooden  equip- 
ment, even  though  the  original 
cost  be  somewhat  greater. 

FIG.  29. — Incoming  bin  tag  placed 


SE-7-A8 
C.W.Co. 
PA 

PURCHASE  0 

WHICH  CALLS  F< 

RTIAL  RECEIPTS  ON 
RPER   P 

3R                                         op 

s 

DATE 

LOT 

NO. 

QUANTITY 
RECEIVE.O 

TOTALS 

.      ^          j 

on  receiving  bin  where  double-bin-  IS    Hoped 

ning  is  used,  for  recording  receipts  nietal  equipment  embodying 

the  same  degree  of  flexibility 

and  interchangeability    as  the  wooden  units  described 
will  be  placed  upon  the  market. 

Double  Binning. — In  choosing  the  types  of  racks  and 
bins  and  in  laying  out  the  store  room  very  careful  con- 
sideration should  be  given  to  the  question  of  "  double 
binning."  This  practice  consists  theoretically  in  divid- 
ing each  bin  into  halves  by  a  partition,  and  thereafter 
using  one  half  as  a  receptacle  for  all  incoming  lots  and 
making  all  withdrawals  for  issue  from  the  other  half, 
reversing  the  process  when  the  latter  becomes  empty. 
On  each  bin  is  a  bin  tag,  the  incoming  tag,  Fig.  29,  for 


THE  STORE  ROOM 


119 


recording  in  totals  the  amounts  received  from  time  to 
time,1  and  the  outgoing  tag,  Fig.  30,  for  entering  each 
withdrawal  as  it  occurs  and  bringing  down  the  balance 
in  this  bin.  Or  should  the  unusual  case  occur  where  the 
incoming  bin  becomes  filled  before  the  outgoing  bin  is 
empty  and  overflow  space  is 
not  available,  the  matter  may 
be  handled  in  a  number  of 
ways  according  to  the  store- 
keeper's judgment.  For  in- 
stance, a  hand  count  may  be 
made  of  what  is  left  in  the 
outgoing  bin,  the  new  ship- 
ment put  in  this  bin  with  the 
old  stock  on  top,  and  the 
amount  added  to  this  tag, 
and  future  issues  made  from 
this  bin  as  before.  This  will 
result  in  the  new  lot  being 
issued  before  the  older  mate- 
rial in  the  incoming  bin,  which  F^G-  ?o.— issuing  bin  tag  placed 

on   issuing  bin   where  double-bin- 
may   Or    may    not    be    SerioUS;    ning   is   used,  for  recording  issues 

if  it  is,  the  same  procedure  as  g^gle  bln^method!6™68  als°  Wlth 
described   may    be    followed 

except  that  the  tags  are  reversed  and  issues  are  made 
from  the  previous  incoming  bin. 

The  principle  of  double  binning  may  be  used  with  a 
great  deal  of  profit  in  almost  every  store  room  and  it 
should  be  incorporated  wherever  possible.  I  say  the 
principle  of  double  binning,  for  the  method  described 
may  be  followed  where  the  material  is  not  binned  at  all 
but  piled  or  stacked  on  the  floor  or  placed  on  trucks, 
or  put  in  racks  as  is  the  case  with  bar  stock.  One  of 
the  two  outstanding  results  secured  through  double 
binning  is  accuracy  of  inventory — a  consummation  usually 

1  A  separate  tag  may  be  made  out  for  each  shipment  received  if  desired, 
and  in  many  cases  this  is  the  best  practice. 


8F1AS 

o.w.co. 
til 

DATE   RECEIVED              STORES   SYMBOL               LOT   NO. 

MONTH        DAY    1    g 

DESCRIPTION 

LOCATION 

PURCHASE  ORDER  NO. 

QUANTITY 
RECEIVED 

KIND    OF 
UNIT 

DATE 
ISSUED 

QUANTITY 
ISSUED 

AND  BAL- 
ANCE  ON 
HAND 

CHARGE   TO 

CONTINUED   ON  BACK 

120 


FACTORY  STORESKEEPING 


worth  all  it  costs,  It  is  secured  in  this  way:  Recog- 
nizing that  there  is  one  and  only  one  way  to  be  sure  of 
what  our  inventory  is — through  an  actual  and  careful 
physical  count  at  the  bin — the  requirement  is  set  up  that 
whenever  an  issuing  bin  for  any  item  becomes  empty,  or 
whenever  a  new  shipment  is  received,  a  hand  count  must 


8.F.    3AS        STORES   &YH.LOL 
CO. 


QUANTITY  BAl.ON    HAND        KIND   OF    UNIT          UNIT    PRICE  TOTAL  VALUE 


STORES  ISSUE 

STOREKEEPER:  Please  issue  above  stores 


Written 


Wanted 


Issued 


19 


19 


19 


APPOR- 
TIONED 


BALANCE 
SHEET 


COST  8TORF8  DESCRIBED  ABOVE  HAVE  BEEN  ISSUED 

SHEET 


SIGNED  BY  STOREKEEPER  OR  REPRESENTATIVE 


FIG.  31. — Stores  issue.  When  properly  filled  in  and  signed  this  consti- 
tutes storekeeper's  authority  to  issue  stores.  It  serves  also  as  a  record  of 
the  transaction  and  for  cost  purposes. 

be  made  of  the  amount  actually  on  hand.  Whenever  a 
bin  tag  becomes  exhausted  either  because  it  is  filled 
with  entries  or  because  zero  amount  has  been  reached,  it 
must  be  sent  at  once  to  the  balance  clerk  so  that  balance 
on  the  proper  balance  sheet  may  be  checked.  Therefore 
when  the  issuing  bin  becomes  empty  the  balance  on  its 
bin  tag  should  be  zero,  thus  dictating  a  physical  inven- 


THE  STORE  ROOM 


121 


tory  of  the  incoming  bin.  The  result  of  this  count  is 
entered  on  the  regular  issuing  tag  or  on  the  existing 
incoming  tag,  Fig.  29,  which  accompanies  the  bin  tag,  and 
the  two  are  sent  to  the  balance  clerk  for  checking,  one 
of  whose  duties  is  to  see  that  such  counts  are  made  regu- 
larly and  accurately.  It  will  be  seen  that  this  procedure 
results  in  the  taking  of  inventory  every  time  the  issuing 


~                        STORES  SYMEOL 

8.F.  4A8 
CO. 

CREDIT  TO 

c 

LOCATION                QUANTITY           QAL.ON    HAN 

0       KIND   OF  UNIT      COST   PER  UNIT      TOTAL  VALUE 

PLEASE    CREDIT   WORKED    MATERIALS   ORDER 
WITH 

wn. 

AND   CHARGE    BACK   TO    STORES. 

NOTE:     IF  THIS  is  A  TRANSFER  TO  ANOTHER  ORDER,  THIS  CREDIT  MUST  BE  ACCOMPANIED 

BY    A   REGULAR  STORES    |SSUE   AGAINST   SUCH   ORDER. 

STORES  CREDIT 

MONTH              DAY                 YEAR 

1    HAVE    RECEIVED    THE    ABOVE    STORES  AND    HAVE    ENTERED   THE   QUANTITY   RECEIVED   ON 
STORES    BIN    TAG, 

TAG             BAL.          cOfcT                                            S 
SHEET         SHEET                                                    G' 

G.  OF    INSPEC. 
VHO     DELIVERS 
DS    TO   STORES 

SIGNED    BY    STOREKEEPER 
OR    HI8    REPRESENTATIVE 

FIG.  32. — Stores  credit.     Used  for  returning  unused  stores;  the  reverse  of  the 
stores  issue  shown  in  Fig*  24. 

bin  becomes  empty  and  always  for  each  item  when  there 
is  least  on  hand. 

Another  partial  check  between  bin  contents  and  book 
balance  may  be  secured  currently  between  these  physical 
inventories.  When  a  bin  tag  becomes  exhausted,  even 
though  the  issuing  bin  is  not  yet  empty,  the  amount  on 
hand  in  the  incoming  bin  (obtained  simply  from  the 
entries  on  the  incoming  tags)  may  be  added  to  the  bal- 


122 


FACTORY  STORESKEEPING 


ance  on  the  outgoing  bin  tag  and  the  sum  entered  on  the 
tag  before  it  is  sent  to  the  balance  clerk.  This  is  simply 
a  paper  check  which  may  be  used  between  the  actual 
physical  count.  Additional  discussion  of  inventory 
keeping  will  be  found  in  Chap.  X,  under  Inventories. 


SF   8  AP 
CO. 


Ret'd 
Iss'd 


urwc      THIS    MATERIAL 

MOV£    AS  DIRECTED: 


FROM. 
TO 


BUILDING  ON 
_BUILDING  ON 


.FLOOR 


WRITTEN  BY. 


RECEIVED  BY. 


.DATE. 
_DATE. 


-FLOOR 
_19 


ROUTE 

SHEETS 


COST 
SHEET 


HAVE  MOVED  THE  MATERIALS  AS  SPECIFIED  ABOVE 


Signed 


FIG.  33. — Move  order. 

The  second,  and  in  many  cases  equally  important 
advantage  of  double  binning  arises  through  the  enforced 
turnover  of  goods  on  hand.  With  the  double-binning 
method  of  storage  it  is  impossible  to  let  steel  parts,  for 
instance,  lie  undisturbed  in  the  bottom  of  a  bin  longer 
than  it  takes  to  use  what  the  bin  holds.  I  have  seen 
iron  washers  dumped  from  the  bottom  of  single  bins  so 
completely  rusted  as  to  be  quite  worthless;  they  had 
simply  remained  there  while  issues  were  made  from  the 
top  of  the  pile,  or  in  other  words  from  the  supply  most 


THE  STORE  ROOM  123 

recently  purchased.  The  necessity  of  thus  turning  over 
stock  arises  with  all  materials  which  rust  easily  or  which, 
like  rubber,  are  subject  to  deterioration  in  other  ways. 
The  only  way  to  enforce  turnover  is  to  make  it  automatic. 
The  double  binning  principle  gives  this  automatic 
feature,  whereas  the  use  of  a  red  rag  or  board  over  the 
" minimum"  amount  in  the  bin,  besides  other  short- 
comings, leaves  this  important  matter  to  the  carefulness 
or  whim  of  the  storekeeper. 

The  fortunate  thing  about  double  binning  or  piling  is 
the  fact  that  it  ordinarily  requires  little  more  space  than 
does  single  binning.  If  we  start  with  a  single  bin  holding 
a  maximum  of  8,000  bolts  of  a  certain  size  and  wish  to 
double-bin  them,  we  would  put  a  partition  in  the  middle 
with  4,000  on  each  side,  and  start  issuing  from  one  of  these 
halves.  So  far  we  have  used  no  more  space  than  origin- 
ally, but  since  it  is  desired  to  keep  new  shipments  out  of 
the  issuing  bin,  the  vacant  space  which  is  constantly 
increasing  in  this  bin  is  not  available  for  storage,  so 
that  if  the  maximum  received  at  any  time  exceeds  the 
capacity  of  the  incoming  bin  (in  this  case  4,000)  addi- 
tional space  becomes  necessary.  Unless  resort  to  over- 
flow bins  be  constantly  made,  this  means  a  larger  bin 
capacity  than  that  required  with  single  bins.  With 
a  well  arranged  store  room,  however,  the  additional 
space  thus  required  for  binned  items  does  not  ordinarily 
exceed  25  to  35  per  cent;  for  piled  or  racked  materials 
where  overhead  space  cannot  be  so  effectively  utilized, 
the  percentage  would  be  higher.  This  additional  space 
in  all  cases,  however,  may  ordinarily  be  secured  in  the 
average  store  room  through  attention  to  a  more  effective 
layout  and  a  better  space  utilization,  particularly  of 
overhead  room. 

Minor  Equipment. — As  regards  office  equipment, 
scales,  ladders,  trucks,  tote  cans  and  other  minor  equip- 
ment of  the  store  room  little  need  be  said,  not  because 
such  equipment  is  unimportant  but  because  there  is 


124  FACTORY  STORESKEEPING 

already  a  great  body  of  descriptions  and  illustrations  of 
these  things,  because  the  investment  in  them  forms  a 
comparatively  minor  element  ordinarily,  and  because  the 
various  dealers  in  them  are  ready  to  help  in  selecting 
from  the  great  variety  offered  the  particular  type  of 
equipment  which  best  suits  varying  local  needs. 

It  is  undeniably  convenient  to  have  the  latest  counting 
and  weighing  machines,  automatic  conveyors  and  similar 
labor-saving  equipment  on  hand  when  they  are  needed, 
but  on  the  other  hand  the  cost  of  the  use  of  these  facili- 
ties must  be  compared  with  the  cost  of  their  absence. 
In  very  large  store  rooms  there  is  little  question  that  the 
very  best  in  such  equipment  is  none  too  good  and  is  a 
safe  investment;  on  the  other  hand,  I  have  found  many 
cases  where  expensive  tiering  machines,  counting  and 
weighing  machines,  scales  and  the  like  remained  covered 
with  dust  for  long  periods.  The  cost  of  having  them  on 
hand  for  the  few  times  they  were  needed  far  exceeded 
what  would  have  been  the  cost  of  using  the  good  old 
strong-arm  methods  during  the  exceptional  times  when 
the  latter  became  necessary.  Just  because  these  various 
pieces  of  apparatus  are  on  the  market  and  in  use  in 
many  store  rooms  is  no  guarantee  that  they  would  be  a 
profitable  investment  for  our  particular  conditions.  If 
we  have  only  two  or  three  men  in  the  store  room  anyway, 
all  of  the  labor  saving  devices  in  the  world  might  not 
enable  us  to  release  one  of  them  or  to  give  much  better 
service.  On  the  other  hand,  nothing  should  be  sacri- 
ficed to  accuracy  and  speed  in  the  receiving,  storing,  and 
disbursing  of  materials,  and  in  keeping  inventory  figures 
correct,  and  if  an  otherwise  overworked  storekeeper  is 
kept  busy  an  hour  hand-counting  items  which  could  be 
accurately  machine-counted  in  5  minutes  it  would  be 
niggardly  not  to  supply  him  with  scales  for  the  purpose; 
and  so  on.  The  layout  of  the  store  room  and  the  provi- 
sion of  interchangeable  standard  racks  suited  to  the 
business,  as  discussed  previously  are  matters  for  very 


THE  STORE  ROOM  125 

careful  consideration  because  these  features  of  the  work 
run  quickly  into  thousands  of  dollars  and  vitally  affect 
the  long-time  efficiency  of  operation  of  the  department; 
mistakes,  furthermore,  once  made  are  not  easily  or 
cheaply  rectified;  as  regards  the  minor  equipment  the 
matter  is  ordinarily  not  so  serious  and  conservatism  is 
the  best  policy  until  the  need  in  any  particular  case  is 
fully  proved. 

There  is  a  certain  minimum  of  equipment,  however, 
which  it  would  be  foolish  not  to  adopt  forthwith  in  any 
store  room.  In  the  case  of  trucks,  it  is  frequently  found 
that  not  only  are  insufficient  quantities  of  trucks  pro- 
vided, but  that  they  have  been  poorly  selected  for  the 
purpose  to  which  they  are  to  be  put,  and  that  they 
consist  of  miscellaneous  kinds.  It  is  always  necessary 
to  provide  a  minimum  of  trucks  in  any  given  case.  To 
this  minimum  should  be  added  a  sufficient  number  so 
that  the  work  of  the  store  room  is  not  held  up  for  lack  of 
a  truck  or  while  the  storekeeper  goes  elsewhere  to  hunt 
one  up.  In  this  connection  pains  should  be  taken  to 
see  that  trucks  be  properly  loaded  and  expeditiously 
despatched  and  that  empty  trucks  be  systematically 
returned  to  designated  stations.  The  type  of  truck 
best  adapted  to  our  particular  business  should  be  care- 
fully ascertained,  although  the  tendency  to  stock  up 
with  special  trucks  not  suitable  for  miscellaneous  moving 
must  be  guarded  against. 

The  same  considerations  apply  to  tote  boxes  and  other 
containers  used  for  moving  material  on  trucks  or  by 
hand.  A  slight  additional  investment  for  a  supply  of 
such  equipment  in  addition  to  what  the  average  store 
room  has  on  hand  will  save  the  storekeeper  and  trans- 
portation men  much  time  during  the  course  of  a  few  days. 

An  ample  supply  of  suitable  ladders  will  repay  the 
investment  in  them.  These  should  be  made  with  a 
broad  base,  wide  step,  and  plenty  of  room  at  the  top 
on  which  to  set  tote  boxes  or  lay  individual  articles. 


126  FACTORY  STORESKEEPING 

They  should  be  light  and  provided  with  substantial 
casters  whereby  they  may  be  quickly  and  readily  moved 
from  place  to  place. 

Finally  in  the  list  of  necessities  comes  the  question  of 
stowage  "on  wheels"  for  all  materials  where  this  method 
is  suitable.  This  refers  to  the  stowage  on  elevating 
truck  platforms  of  items  which  are  ordinarily  piled,  such 
as  paper,  leather,  shooks,  cloth,  box  cartons  in  the  flat 
state,  and  similar  items.  With  most  of  such  materials 
much  unnecessary  handling,  both  in  the  store  room  and 
in  the  shop,  may  be  avoided  by  providing  a  sufficient 
number  of  platforms  either  with  or  without  specially 
constructed  racks  as  found  necessary,  on  which  materials 
may  be  piled  instead  of  on  the  floor.  In  most  cases 
with  the  exercise  of  a  little  ingenuity  these  platforms 
may  be  used  to  pile  material  to  a  considerable  height; 
and  in  some  cases,  above  the  practicable  platform  piling 
height,  a  permanent  storage  rack  is  erected  under  which 
sits  the  platform  with  its  pile  of  material.  Most  advan- 
tage will  be  secured  in  this  method  of  storage  if  standard 
lots  may  be  determined  upon  as  the  amout  to  be  piled 
on  one  platform,  so  that  no  counting  is  necessary  when 
a  withdrawal  is  made,  the  elevating  truck  being  simply 
run  under  the  platform,  "raised,  the  load  withdrawn, 
transported  to  the  point  of  use,  deposited,  and  the  truck 
withdrawn  for  another  load.  The  possibilities  in  saving 
handling  expense  in  the  shop  are  very  great  with  such 
platforms.  I  have  counted  no  less  than  seven  unneces- 
sary handlings  of  materials  in  process  through  different 
machines,  due  to  the  unloading  from  the  garden  variety 
of  trucks  to  the  floor,  picking  it  up  and  putting  it  through 
the  various  machines,  piling  it  on  the  floor  again,  loading 
it  to  the  truck  for  transportation  to  the  next  machine, 
and  finally  unloading  to  the  floor  beside  this  machine. 
Much  of  such  handling,  moreover,  was  done  by  the 
mechanic  who  left  his  machine  idle,  although  there  was 
plenty  of  work  to  be  processed. 


THE  STORE  ROOM  127 

Stowage. — The  physical  arrangement  of  goods  in 
stores,  including  the  placement,  removal,  and  general 
rules  for  handling.  The  following  definitions  are  given 
in  order  that  the  terms  used  in  succeeding  discussions 
may  be  clear.  The  illustrations,  Fig.  34,  show  the  same 
thing  graphically 
I.  Definitions: 

1.  Article. — Any  one  kind  of  material,  as  Machine 
Bolts. 

2.  Item. — Any  one  size  or  variety  of  an  article,  as 
Hex  Head  Machine  Bolts,  U.  S.  Standard,  W  X  3J£". 

3.  Unit  or  Piece. — Any  single  piece  as  one  bolt  (as 
above) . 

4.  Package. — A  quantity  in  original  container,  as  1 
box  of  bolts  (as  above),  12  in  a  box. 

5.  Lot. — A  quantity  received  and  stored  at  any  one 
time,  as  1  gross  bolts  (as  above)  12  boxes,  12  in  a  box. 

6.  Standard  Lot. — A  quantity  determined  upon  as 
most  suitable  for  our  particular  conditions  of  use,  as  50 
bolts  (as  above). 

7.  Column. — A  number  of  units   (or  packages)    in 
vertical  arrangement,  one  wide,  one  deep,  two  or  more 
high. 

8.  Row. — A  number  of  units  in  fore  and  after  arrange- 
ment, one  wide,  two  or  more  deep,  one  high. 

9.  Course. — A  number   of  units  in   left   and   right 
arrangement,  two  or  more  wide,  one  deep,  one  high. 

10.  Section. — A  number  of  rows  in  vertical  arrange- 
ment, one  unit  wide,  two  or  more  deep,  two  or  more  high. 

11.  Tier. — A  number  of  rows  in  left  and  right  arrange- 
ment, two  or  more  units  wide,  two  or  more  deep,  one  high. 

12.  Block. — A  number  of  courses  in  vertical  arrange- 
ment, two  or  more  units  wide,  one  deep,  two  or  more  high. 

13.  Stack. — A  number  of  tiers  in  vertical  arrangement, 
two  or  more  units  wide,  two  or  more  deep,  two  or  more 
high. 

14.  Wedge  Stack. — An  arrangement  of  units  in  the 
form  of  a  wedge,  as  illustrated  by  the  storing  of  shells, 
cans  and  other  cylindrical  bodies. 


128 


FACTORY  STORESKEEPING 


15.  Pyramidal   Stack. — An   arrangement   of   units   in 
the  form  of  a  pyramid  as  illustrated  by  the  storing  of 
cannon  balls  and  other  spherical  bodies. 

16.  Pile  or  Heap. — An  irregular  mass  of  pieces  such  as 
a  pile  of  coal. 


G**n\%£         SecHon 

13-Units  high  13-Units  high 


13-Units  high 


- Unit  high 


Row 


Stock  (5oxes){}_wj£p 

13-Units  high        j-Unii-  high 
FIG.  34. — Stowage  units,  illustrating  the  text  on  this  subject. 


9 

Wedge  Stack 
(Cam) 


II.  Instruction  for  Stowage. — A  few  cardinal  rules  for 
the  stowage  of  materials,  strictly  observed,  will  facilitate 
handling  and  taking  inventory  of  stores. 

1.  Have  a  Designated  Stowage  Place  for  Each  Item,  and 
so  far  as  possible  keep  all  of  that  item  and  no  other  in  that 
place,  properly  stowed.  When  it  becomes  necessary  to 
place  different  articles  or  items,  or  different  lots  of  the 
same  item,  in  the  same  stowage  space,  separate  the  piles 


THE  STORE  ROOM  129 

or  stacks  by  at  least  2  inches,  if  in  bins,  and  by  at  least  5 
inches  if  on  platforms  or  in  piles  on  floor  between  aisles. 
Be  sure  that  this  arrangement  is  such  that  it  never 
becomes  necessary  to  remove  one  item  to  get  at  another. 

2.  Arrange   Items  for    Maximum   Facility  in  Taking 
Inventory. — In  other  words,  as  you  face  the  stowage  area 
from  the  aisle,  commence  piling  at  the  back  left-hand 
corner  and  complete  this  column  to  the  top,  then  in 
front  of  this  build  the  next  column  and  so  on,  com- 
pleting the  left-hand  section.     Similarly  complete  the 
next  section  to  the  right,  each  column  being  completed 
so  that  no  vacant  spaces  will  remain  hidden,  before  a 
new  one  is  started,   only  the  last   column  remaining 
incomplete  as  shown  at  Fig.  34,  No.  8.     Place  all  labels 
facing  the  aisle  where  possible. 

In  taking  inventory,  multiply  number  of  packages  or 
units  per  block  by  number  of  full  blocks,  and  add  to 
this  the  number  of  packages  in  the  incomplete  section.1 
Or  for  a  wedge  stack,  number  in  block  equals : 

Wedge  stack: 

number  on  bottom  course  X  (No.  of  courses  +  1) 

~2~ 
For  a  pyramidal  stack: 

number  on  bottom  course  (No.  of  courses  -j-  1  )(2  X  No.  of  courses  +  1 ) 

~~6~ 

3.  Provide  for  Securing  Turnover  of  Stock. — The  method 
of  doing  this  will  vary  somewhat  as  between  single  and 
double  binning,  stacking,  or  piling: 

A.  Single  Stacking. — Always  issue  from  the  right 
hand  side  of  the  stack,  starting  with  the  incomplete 

1  In  .some  cases  stowage  may  be  arranged  so  that  the  taking  of  inven- 
tory is  even  quicker  than  this.  It  is  often  possible  with  articles  which 
occupy  space  in  direct  proportion  to  quantity,  to  establish  a  scale  or 
gauge  at  the  side  of  the  stack,  bin,  ca/boy  or  other  container  which  at  a 
glance  indicates  sufficiently  accurately  the  quantity  on  hand.  Familiar 
examples  of  such  scales  of  quantity  are  found  in  coal  bins  and  in 
lumber  sheds,  and  the  general  method  is  applicable  to  the  measurement 
of  many  other  materials  if  a  suitable  measure  be  devised. 


130  FACTORY  STORESKEEPING 

section  (see  Fig.  34)  and  working  in  the  opposite  direc- 
tion (to  the  left)  from  that  in  which  the  stack  was  built 
up.  Remove  each  column  and  section  complete  before 
another  is  disturbed.  (If  stacks  tend  to  topple  over,  it 
may  be  necessary  to  remove  items  by  tiers,  leaving  the 
top  of  the  stack  instead  of  the  right  hand  section  incom- 
plete, and  modify  procedure  accordingly.  This,  how- 
ever, is  more  wasteful  of  stowage  space  and  should  not  be 
done  unless  necessary.)  When  a  new  lot  of  the  same 
item  is  received,  pile  it  (as  directed  in  2  above)  to  the 
left  of  present  lot,  removing  the  left  hand  sections  of  the 
latter  and  putting  these  packages  on  the  right  hand  side 
as  it  becomes  necessary  to  provide  the  necessary  room. 
The  new  lot  may  be  placed  flush  with  the  old  in  single 
stacking  unless  it  is  desired  for  identification  purposes 
to  keep  the  two  lots  physically  separate.  Leave  odd 
packages  on  the  right  hand  section  of  new  lot  where 
separation  of  lots  is  necessary,  or  use  more  of  the  old 
lot  to  fill  in  new  stack  complete  where  stacks  are  to  be 
flush  throughout.  Where  it  is  impracticable  or  too 
expensive  to  move  the  old  lot  to  make  way  for  the  new, 
the  latter  may  be  piled  to  the  right  of  the  present  lot  as 
described  in  the  next  topic. 

B.  Double  Stacking. — Where  double  stacking  is  prac- 
ticed, it  is  necessary  always  to  have  space  for  two  stacks, 
one  from  which  all  issues  are  made,  the  other  to  which  all 
receipts  are  added.  Each  stack  is  built  up  as  explained 
in  topic  2  above,  and  between  the  two,  a  vacant  space  of 
not  less  than  5  inches  should  ordinarily  be  left.  With- 
drawals are  made  from  right  to  left  of  issuing  stack  as 
explained,  and  when  issuing  stack  is  exhausted  start 
issuing  from  the  previous  incoming  stack,  and  put 
future  receipts  in  space  just  left  vacant.  Here  again 
procedure  will  have  to  be  modified  as  suggested  (3-A 
preceding)  where  it  is  desired  to  keep  each  lot  separate. 
Which  stack  or  lot  is  outgoing  and  which  incoming  at 
any  particular  time  is  indicated  by  the  difference  in  bin 
tags,  or  by  a  marker,  if  desired. 


THE  STORE  ROOM  131 

4.  Establish  Standard  Lots  for  Stowage  and  Issue  of 
Materials  Where  Practicable. — It  is,  unfortunately,  seldom 
possible  to  make  the  trade  container,  box,  keg,  carton, 
etc.,  at  once  our  unit  of  purchase,  stowage  and  issue 
throughout,  although  this  should  be  done  where  possible. 
In  such  cases  the  container  need  not  be  opened  (except 
for   inspection    and    possible    treatment    against    rust) 
until  it  reaches  the  point  of  use.     Clerical  work  in  such 
cases  is  much  simplified,  since  the  transactions  relate  to 
a  few  packages  containing  many  units. 

Where  this  is  not  possible,  however,  it  will  facilitate 
issuing  and  quick  service  if  at  the  time  of  inspection 
instead  of  putting  the  units  back  in  original  containers 
or  storing  them  loose  in  bins  they  are  divided  off  when 
being  counted  into  predetermined  standard  amounts 
which  are  suitable  for  delivery  as  separate  lots  to  the  point 
of  use.  Such  items  as  bolts  and  nuts,  screws,  special 
castings  and  so  on  may  always  be  needed  for  assembly 
of  a  standard  product  in  certain  definite  quantities;  this 
quantity  would  be  sorted  into  suitable  boxes  or  put  into 
strong  bags  and  stored  as  a  standard  lot  ready  for  issue 
without  further  counting. 

Again,  the  method  of  storing  in  bulk  and  issuing  by 
units  described  below  under  " Maintenance  Stores" 
(page  35)  will  cut  down  the  clerical  work  incident  to  book 
entries  and  to  inventory  taking. 

5.  Utilize  Available  Stowage  Space  to  Utmost  Capacity. 
Study  your  requirements  in  each  material  and  try  to 
have  just  enough  and  not  too  much  space  for  each  article. 
By  providing  standard  racks  and  interchangeable  bins, 
together  with  leaving  vacancies  every  so  often  at  the 
start  and  providing  overflow  bins  when  necessary,  one 
may  afford  to  be  very  miserly  in  alloting  space  for  the 
various  items  without  fear  of  later  confusion  in  case  his 
estimate  was  wrong.     Readjustments  in  such  cases  may 
readily  be  made. 

The  great  obstacle  to  more  effective  space  utilization 


132  FACTORY  STORESKEEPING 

is  the  lack  of  data  showing  how  much  space  a  given 
number  of  any  item  will  occupy,  or  how  many  may  be 
stored  in  the  given  space  which  is  available.  A  start 
has  been  made  in  the  collection  of  such  information  and 
some  sample  values  are  shown  in  the  Appendix. 

Protection. — From  Fire  and  Explosion. — Since  in  the 
normal  factory  the  equivalent  of  more  money  is  held 
within  the  four  walls  of  the  store  room  than  in  any  other 
part  of  the  establishment,  it  follows  that  every  precaution 
should  be  taken  to  insure  against  loss.  The  store  room 
should  of  course  be  of  fireproof  construction  if  practi- 
cable. In  any  event,  certain  precautions  must  be 
observed  to  prevent  loss  through  explosion  or  fire. 

No  inflammable  material,  such  as  gasoline,  powder, 
dynamite,  and  so  on,  should  ever  be  allowed  in  the  store 
room  itself.  Such  material  should  be  stored  in  an  iso- 
lated position  away  from  all  buildings. 

Within  the  store  room  itself,  cleanliness  should  be 
absolutely  insisted  upon.  Oily  waste,  paper,  burlap,  and 
all  materials  subject  to  spontaneous  combustion,  or 
which  readily  serve  to  feed  an  incipient  blaze,  should  be 
rigorously  excluded  from  the  store  room  except  as  they 
may  be  brought  there,  or  accumulate  temporarily, 
pending  prompt  disposal.  x 

All  aisles  must  be  kept  absolutely  clear  of  permanent 
obstructions.  The  only  obstruction  which  should  be 
permitted  in  any  aisle  is  that  caused  temporarily  by 
men  and  trucks  actually  in  process  of  delivering  goods. 
When  a  truck  has  been  emptied  or  filled,  it  must  not  be 
allowed  to  clog  up  the  aisle,  but  should  be  taken  immedi- 
ately to  designated  positions.  The  possibility  of  con- 
trolling a  fire  should  not  be  lessened  through  unnecessary 
obstructions. 

It  goes  without  saying  that  the  most  modern  overhead 
sprinkler  system  should  be  installed.  Particular  care 
must  be  taken,  furthermore,  to  see  that  the  sprinkler 
has  a  chance  to  perform  properly  through  having  plenty 


THE  STORE  ROOM  133 

of  room  between  sprinkler  head  and  piles  of  material. 
Having  determined  the  minimum  head  room  which 
should  be  left,  constant  vigilance  through  systematic 
inspection  is  necessary  to  prevent  store  room  attendants 
from  encroaching  upon  this  space. 

An  ample  supply  of  hand  fire  extinguishers  should  be 
provided  at  convenient  points.  An  incipient  blaze 
may  be  extinguished  through  the  use  of  such  extin- 
guishers before  it  has  become  sufficient  to  start  the 
sprinkler  heads. 

As  an  extra  precaution,  a  hose  connected  to  a  head 
different  from  that  to  which  the  sprinkler  system  is 
attached  should  be  provided. 

As  to  the  use  of  wood  instead  of  steel  storage  racks 
and  bins  little  can  be  said  as  regards  insurance  rates 
because  conditions  vary  so  widely  >  making  individual 
appraisals  necessary  in  each  case.  For  instance,  the 
difference  in  rates  in  any  given  case  between  sprinklered 
and  unsprinklered  store  rooms  is  very  materially  in  favor 
of  sprinklers,  and  this  holds  true  in  general  regardless  of 
what  kind  of  storage  equipment  is  used.  In  unsprink- 
lered store  rooms  the  use  of  metal  equipment  might 
amount  to  as  much  as  20  per  cent  saving  in  rates  over 
wood  equipment  in  some  cases,  whereas  in  others  the  sav- 
ings would  be  negligible.  With  the  use  of  sprinklers, 
however,  which  is  the  only  safe  way,  there  appears 
ordinarily  to  be  little  choice  as  against  metal  and  wood  as 
far  as  insurance  rates  go. 

Rust. — All  material  subject  to  deterioration  through 
rust  must  be  treated  by  some  one  of  the  numerous 
preparations  available  for  this  purpose.  It  must  be 
remembered  that  the  chemical  decomposition  of  metals 
takes  place  much  more  rapidly  during  the  warm  humid 
days  of  summer,  and  particular  attention  is  necessary 
at  this  time.  Parts  which  are  to  be  held  in  storage  more 
than  a  week  should  be  given  a  coating  of  rust 
preventative. 


134  FACTORY  STORESKEEPING 

Specifications,  tests  and  prices  of  the  various  rust 
preventing  agents  may  be  obtained  from  the  vendors,  as 
may  also  the  machines  and  solutions  by  which  they  may 
be  readily  removed.  Care  must  be  taken  to  secure  an 
agent  which  does  not  readily  evaporate  and  which  does 
not  corrode  or  otherwise  injure  the  surface  of  the  metal. 

In  the  discussion  of  double-binning  methods,  it  was 
emphasized  that  one  of  the  prime  advantages  to  be 
derived  through  this  method  was  the  insurance  of  a 
turnover  of  stock.  Even  with  double-binning,  however, 
the  turnover  may  be  insufficient  to  prevent  rust  and  this 
method  must  be  looked  upon  as  a  supplement  to,  and  not 
a  substitute  for,  the  use  of  rust  preventing  agents. 

Hardening,  Evaporation,  and  Similar  Deterioration.— 
In  the  case  of  materials  such  as  rubber  which  hardens  and 
becomes  useless  with  age,  and  in  the  case  of  certain  oils 
which  solidify  if  left  standing  too  long,  the  double- 
binning  principle  comes  fully  into  its  own.  The  pro- 
vision of  one  bin  or  aisle  for  all  incoming  material,  its 
brother  being  used  for  all  issuing,  as  explained  under 
the  discussion  of  double-binning  (pages  118  to  123)  is 
the  only  sure  way  to  provide  automatically  and  sys- 
tematically for  a  regular  turnover  of  stock.  Since 
double-binning  requires  somewhat  more  space  than 
single-binning,  the  principle  may  be  used  of  course  for 
the  storage  of  this  kind  of  goods,  while  those  not  subject 
to  rapid  deterioration  may  be  single  binned.  The  only 
loss  in  the  latter  case  is  the  loss  of  accuracy  of  inventory,  a 
sufficiently  important  consideration,  however,  in  all  cases. 

Dust. — The  prime  prerequisite  here  is  to  keep  the 
store  room  thoroughly  cleaned  and  to  provide  dustproof 
racks  for  such  articles  as  stationery,  which  would  be 
ruined  should  they  become  the  least  bit  dirty.  The 
standard  racks  and  bins  described  and  illustrated  pre- 
viously are  entirely  adaptable  to  closed  cabinets  and 
many  such  racks  are  in  use  today  for  the  dustproof 
storage  of  many  different  articles. 


THE  STORE  ROOM  135 

Pilfering. — The  success  with  which  so  many  plant 
activities  may  be  controlled  hinges  at  many  points  on  the 
accuracy  of  the  inventory.  Consequences  have  at 
times  been  very  distressing  when  100  pieces  were 
supposed  to  be  on  hand  when  there  were  actually  only 
85.  Accounting  statements,  furthermore,  are  mislead- 
ing unless  inventory  of  materials  and  work  in  process 
be  correct.  Primarily,  in  order  that  any  semblance  of 
control  may  be  maintained,  and  only  secondarily  because 
some  of  us  have  the  habit  of  pocketing  what  does 
not  belong  to  us,  a  locked  store  room  is  necessary. 
The  psychological  effect,  furthermore,  is  excellent. 

The  temptation  to  petty  theft  is  particularly  strong 
in  the  case  of  such  handy  household  articles  as  tacks 
and  hammers,  electric  light  globes,  ink,  paper,  mucilage, 
and  similar  items.  If  such  articles  are  left  where  they 
may  handily  be  slipped  in  one's  pocket  for  home  consump- 
tion it  is  inevitable  that  that  is  what  will  happen  to 
many  of  them.  Such  temptations  should  be  removed. 
This  does  not  mean,  however,  that  we  are  to  be  parsi- 
monious in  furnishing  supplies,  or  even  that  we  may 
not  adopt  a  liberal  policy  in  supplying  at  cost  such 
articles  as  the  individual  employees  may  desire.  With 
the  locked  store  room  and  a  tight  rein  generally,  accom- 
panied by  a  judicious  amount  of  what  workmen  are 
usually  pleased  to  regard  as  "red  tape"  most  of  the 
needless  requests  and  petty  takings  will  disappear  of 
themselves  and  a  liberal  policy  in  these  respects  may 
neutralize  what  might  otherwise  be  considered  irksome 
system.  It  simply  means  knowledge  at  all  times  where 
we  stand  and  that  insistence  must  be  placed  upon  the 
locked  store  room,  the  written  requests,  and  the  approval 
of  some  responsible  official  before  articles  are  furnished 
for  private  consumption. 

Maintenance  Stores. — The  adequate  handling  of 
supplies  used  in  the  upkeep  of  plant  offers  peculiar 
problems  and  difficulties  because  of  the  emergency  nature 


136  FACTORY  STORESKEEPING 

of  much  of  the  maintenance  work.  Some  factories 
have  made  great  strides  in  standardizing  current  inspec- 
tion and  repairs,  and  in  planning  and  even  paying  a  bonus 
on  the  operations  performed  by  this  department,  but 
there  is  an  irreducible  minimum  of  hurry-up  jobs  which 
places  the  retention  of  "system"  in  the  maintenance 
store  room  constantly  to  severe  tests.  On  the  one  hand, 
to  maintain  any  semblance  of  control  of  inventory  and 
issue  a  certain  amount  of  systematic  routine  must  be 
insisted  upon;  on  the  other  hand  a  few  seconds  delay 
when  a  steam  pipe  or  water  main  bursts  is  not  to  be 
tolerated.  The  question  is  how  to  secure  control  and 
avoid  delay. 

Reference  is  made  to  preceding  discussions  of  such 
matters  as  organization,  layout,  the  provision  of  adequate 
equipment  including  standard  interchangeable  racks  and 
bins  properly  indexed  with  cross  references,  and  operated 
by  double  binning  methods — all  features  of  good  store- 
room management  doubly  important  in  this  case.  In 
addition  to  these  matters  I  wish  simply  to  suggest 
briefly  means  by  which  the  work  of  the  maintenance 
department  may  be  speeded  up  and  yet  controlled 
in  two  features  of  its  work  which  ordinarily  cause  most 
concern — the  handling  of  supplies  and  spare  parts,  and 
the  checking  in  and  out  of  tools. 

Supplies  and  Spare  Parts. — It  is  needless  to  emphasize 
the  fact  that  the  regulation  of  replenishment,  follow-up, 
inspection,  storing,  and  balance  sheet  control  previously 
described  is  doubly  important  in  the  case  of  items  which 
have  such  potential  possibility  of  causing  disaster  through 
an  insufficient  or  unsuitable  supply  as  have  most  of  the 
articles  carried  in  the  maintenance  store  room.  Because 
of  their  nature  it  also  follows  that  a  liberal  policy  as 
regards  amount  of  inventory  must  be  adopted  and  that 
this  policy  must  be  reflected  in  the  setting  of  low  limits 
and  amounts  to  order,  and  to  such  a  plentiful  allowance 
must  be  added  constant  vigilance  to  anticipate  extraordi- 
nary requirements. 


THE  STORE  ROOM  137 

Previously  in  this  chapter,  under  Departmental 
Supplies,  two  alternatives  in  charging,  or  allocating  cost  of 
materials  issued  to  the  proper  account,  were  indicated : 

1.  Charging  departmental  supplies  simply  to  depart- 
mental expense,  to  be  taken  up  in  overhead. 

2.  Charging   departmental   supplies   to   specific   jobs 
where  desirable  from  a  cost-finding  standpoint. 

In  the  case  of  maintenance  department  supplies  both 
methods  are  usually  desirable — the  first  for  small 
inexpensive  items,  the  second  for  expensive  or  special 
materials  which  the  particular  job  served  should  carry. 
In  cases  where  the  reserve  supply  of  those  items  which 
are  stocked  is  kept  in  a  central  store  room  from  which 
small  current  supplies  are  issued,  the  procedure  described 
under  Departmental  Supplies  above,  is  applicable. 

Where  this  is  not  the  case,  but  the  whole  supply  of 
such  parts  as  are  needed  for  maintenance  is  stored  in  the 
maintenance  store  room,  a  slightly  different  procedure 
is  necessary,  in  order  that  best  results  as  a  whole  may  be 
obtained  and  the  desired  charges  made  between  those 
to  be  charged  to  departmental  expense  and  those  to  be 
charged  special. 

For  those  to  be  charged  to  departmental  expense  when 
issued  to  the  workman,  the  following  will  be  found  an 
effective  procedure: 

A  reserve  supply  will  be  kept  in  one  bin,  in  original 
package  or  in  other  standard  lot  as  is  desirable.  On  this 
supply  the  regular  procedure  described  for  the  central 
store  room  will  operate — in  other  words  for  each  such 
item  there  will  be  a  balance  sheet  which  controls  replenish- 
ment and  records  all  transactions,  and  a  bin  tag  at  the 
bin  will  be  operated  as  described.  Back  to  back  or 
alongside  of  this  main  bin  will  be  another  smaller  bin 
which  is  used  for  direct  issue  to  the  workman.  When  the 
latter  becomes  empty,  a  transfer  in  bulk  will  be  made 
from  the  main  bin,  and  at  that  time  a  stores  issue  will 
be  •  made  for  the  quantity  transferred,  charging  the 


138 


FACTORY  STORESKEEPING 


amount  to  departmental  supplies.  The  articles  will 
be  placed  loose  in  issuing  bin,  from  which  issues  may  be 
made  without  further  record.  This  procedure  allows 
immediate  issue,  gives  accurate  control  of  inventory  of 
main  bin  (upon  which  replenishment  is  based)  and  assists 
in  a  turnover  of  stock. 

For  materials  to  be  charged  to  specific  job  number, 
either  those  purchased  specially  or  those  of  considerable 
value,  the  proper  charge  is  unknown  until  the  use  is 
known.  Where  this  use  may  be  ascertained  previous 
to  issue  the  stores  issue  may  be  filled  out  and  placed 


CHECK  f> 

QUANTITY  WANTED 

JO 

SYMBOL  OF  TOOL  WANTED 

DESCRIPTION  OF  TOOL  WANTED 

Month      Day 

Year 

Signed  by  man  receiving  tools. 

NOTE.      ONLY  ONE   KIND  OF  TOOL  CAN  BE 

ISSUED  ON 

FIG.  35. — Tool  check. 

aside  with  the  article  until  called  for,  which  will  expedite 
action  in  delivery,  but  on  a  hurry-up  job  there  is  nothing 
to  do  but  give  out  the  material  as  called  for  and  attend 
to  the  issues  later.  By  following  the  procedure  indicated, 
however,  the  paper  work  at  time  of  issue  may  be  reduced 
solely  to  rush  jobs — a  small  proportion  of  the  work  in 
well-run  maintenance  departments. 

Tools  and  Fixtures. — A  similarly  simple  procedure 
covering  tools  will  give  the  speed  and  definiteness 
essential  for  effective  work.  Each  tool,  of  course,  must 
have  its  own  location,  which  must  be  so  indexed  and 
cross  indexed  as  to  make  it  possible  for  an  entire  stranger 
to  find  any  tool  in  a  very  few  moments,  no  matter 
whether  it  is  in  its  rack  or  in  the  hands  of  some  mechanic 
at  the  other  end  of  the  plant. 


THE  STORE  ROOM  139 

This  may  be  accomplished  in  the  following  way: 
The  tool  racks  must  be  plainly  lettered  according  to  a 
systematic  scheme.  A  card  index  of  each  tool  refers 
to  the  rack  where  it  is  stored.  When  a  mechanic 
desires  a  tool  he  comes  to  the  window,  fills  out  and  signs 
the  tool  check  shown  as  Fig.  35,  the  attendant  issues 
him  the  tool,  files  the  check  by  tool  symbol,  and  in  a 
compartment  with  the  mechanic's  number  on  it  files  a 
tag  on  which  this  tool's  symbol  is  stamped.  The  whole 
transaction  should  take  but  a  moment.  Looking  at  the 
file  of  checks  one  may  see  just  who  has  any  particular 
tool  and  where  he  has  gone  with  it  (in  case  recall  is 
desired  in  a  hurry),  and  looking  at  the  man's  compart- 
ment, one  may  see  just  what  tools  are  now  in  his  posses- 
sion. When  the  tool  is  returned  the  mechanic  is  given 
his  check,  the  tag  is  replaced  under  tool  symbol,  and 
the  tool  returned  to  its  pigeonhole. 


CHAPTER  IX 

CLASSIFICATION  AND  SYMBOLIZATION  OF 
MATERIALS 

SUMMARY:  Classification:  Rules  for  Making — Symbolization:  Rules 
for  Symbols — Basis  of  Industrial  Classification — Basis  of  Mnemonic 
Symbols — The  Base  Sheet  of  Mnemonic  Classification — Classification  of 
Charges — Classification  of  Product — Classification  of  Stores — Other 
Classifications. 

A  poor  classification  or  a  poor  set  of  symbols  is  much 
worse  than  none  at  all,  while  a  sound  classification  with 
suitable  symbols  is  a  remarkably  effective  tool.  The 
subject  is  too  large  for  complete  treatment  in  such  a 
volume  as  this,  but  at  the  risk  of  becoming  somewhat 
didactic  I  wish  to  point  out  how  to  avoid  some  of  the 
pitfalls  as  well  as  how  to  get  a  start  in  the  classification 
and  symbolization  of  materials  along  lines  which  have 
proved  sound. 

Classification. — First,  the  difference  between  classifi- 
cation and  symbolization  should  be  kept  in  mind. 
Classification  is  nothing  more  nor  less  than  segregating 
those  things  with  which  we  deal  into  like  and  unlike 
according  to  various  bases — kind,  purpose,  effect  and 
so  on.  Classification  is  of  course  necessary  for  scientific 
progress,  and  it  is  significant  that  little  real  progress 
was  made  with  any  of  our  sciences  until  satisfactory 
classifications  had  been  developed.  The  difference 
between  empirical  and  scientific  knowledge  is  largely  a 
matter  of  classification,  and  it  should  be  looked  upon 
in  the  nature  of  providing  a  pigeonhole  for  each  new 
detail  or  fact  as  it  is  unearthed.  To  be  of  lasting  ser- 
vice a  classification  need  conform  only  to  the  following 
requirements : 

Rules    for    Classification. — First. — The    classification 

140 


CLASSIFICATION  OF  MATERIALS  141 

must  be  logical  and  utilitarian — on  a  basis  proper  to  its 
effective  use, — and  it  must  be  consistent  in  adherence  to 
this  basis. 

Second. — It  must  proceed  consistently  from  the  general 
to  the  specific. 

Third. — It  must  be  capable  of  being  indefinitely  and 
consistently  expanded. 

Fourth. — It  must  be  inclusive  up  to  the  present  state 
of  knowledge. 

Symbolization. — A  symbol  on  the  other  hand  is  simply  a 
sign,  letter,  emblem  or  character  of  some  kind  which  is 
used  to  represent  another,  usually  a  longer,  expression. 
After  a  given  classification  is  determined  upon,  the  next 
step  is  to  assign  to  each  component  of  the  classification 
a  symbol  which  will  appropriately  represent  it,  so  that 
the  act  of  symbolizing  naturally  succeeds  and  must 
logically  conform  to  the  classification.  Although 
symbols  are  not  indispensable  they  are  exceedingly  useful 
if  properly  made,  and  we  need  only  turn  to  the  symbols 
of  chemistry  as  an  example  par  excellence  in  this  respect. 
The  requirements  for  an  adequate  system  of  symbols 
may  be  stated: 

Rules  for  Symbolization.— First. — The  symbol  system 
must  fit  the  classification.  It  must  be  elastic,  and  easily 
and  consistently  expanded.  The  degree  of  subdivision 
in  the  symbol  should  correspond  exactly  with  the  degree 
of  subdivision  of  the  classification;  that  is,  guard  against 
choosing  a  method  (such  as  the  decimal)  which  makes 
necessary  calling  " Physics"  570  while  the  coordinate 
item •"  Chemistry  "  must  be  580.1,  for  example.  In  other 
words  provide  for  the  maximum  number  of  subdivisions 
at  any  one  stage ;  thus  there  are  twenty  six  letters  but  only 
nine  numerals  available  for  use  in  any  one  position. 

Second. — Symbols  must  be  definite  and  clear.  One 
symbol  must  mean  but  one  thing,  and  any  one  thing 
must  have  but  one  symbol.  A  dropped  symbol  should 
not  be  again  used  for  at  least  a  year. 


142  FACTORY  STORESKEEPING 

Third. — Symbols  preferably  should  be  capable  of 
being  easily  learned  and  easily  remembered — mnemonic 
and  suggestive.  Thanks  to  Berzelius,  we  are  not  likely 
ever  to  forget  that  C  stands  for  carbon,  H  for  hydrogen, 
and  so  on;  few  of  us  can  remember  for  any  length  of  time 
that  598.761  represents  a  certain  make  of  carbon  steel 
or  that  500.16  indicates  a  departmental  charge  for  mis- 
cellaneous supplies  furnished  the  machine  shop. 
•  Fourth. — Symbols  preferably  should  be  as  simple  and  as 
brief  as  is  consistent  with  clearness  and  definiteness.  It 
is  not  only  more  mnemonic  but  much  simpler  and 
briefer  to  write  C  instead  of  Dalton's  hieroglyphic  for 
carbon.  It  is,  moreover,  perfectly  clear  and  perfectly 
definite.  It  may,  on  the  other  hand,  be  simple  to  write 
H65  for  ten-penny  wire  nails,  but  it  is  neither  definite, 
clear,  nor  mnemonic. 

Fifth. — Symbols  preferably  should  be  as  foolproof  as  it 
is  possible  to  make  them.  It  should  be  difficult  to  make 
and  easy  to  catch  mistakes  in  the  writing  and  interpre- 
tation of  symbols.  Thus,  if  we  use  both  capital  letters 
and  numerals  in  our  symbol  system,  we  must  omit  the 
letters  I  (because  it  resembles  the  numeral  1),  O  (resem- 
bles zero),  Q  (resembles  2),  and  preferably  U  (resembles 
letter  V  when  hurriedly  written) . 

Again,  if  we  use  letters  at  all  we  must  preferably  use 
either  all  capital  block  or  all  small  letters,  because  of  the 
resemblance  as  frequently  written,  of  capital  and  small 
A,  C,  E,  J,  M,  N,  0,  S,  U,  V,  W,  X,  and  Z. 

Transposition  of  numbers,  furthermore,  is  ordinarily 
much  harder  to  detect  than  is  the  case  with  letters.  If 
the  symbol  should  be  7854.3,  but  is  written  7845.3  by 
mistake,  there  is  nothing  in  the  symbol  itself  to  show  that 
the  latter  is  wrong;  on  the  other  hand  if  instead  of 
SVSTR  we  should  write  SVTSR  it  would  be  detected 
at  once  because  we  remember  there  is  no  such  combination 
as  SVTSR  in  our  symbols ;  or,  if  there  be  such,  the  context 
in  which  it  is  used  will  in  most  cases  tell  whether  it  is 


CLASSIFICATION  OF  MATERIALS  143 

properly  used.  An  observance  of  the  foregoing  rules  I 
believe  will  assist  in  avoiding  the  confusion  so  frequently 
found  in  industrial  symbol  systems. 

Basis  of  Industrial  Classification. — In  order  that  the 
basis  and  details  of  the  method  of  classifying  and  sym- 
bolizing materials  to  be  described  may  be  clear,1  it  must 
be  kept  in  mind  that  all  components  of  the  business- 
charges  (both  capital  and  revenue);  tools,  machines, 
equipment,  operations  and  functions,  as  well  as  materials 
(both  raw  and  worked)  are  tied  together  into  one  logical 
system  on  one  fundamental  basis.  This  basis  is  costs— 
the  cost  of  doing  business.  Every  piece  of  material 
we  buy,  every  piece  of  equipment  we  purchase,  every 
hour  of  labor  we  pay  for — every  step  we  take  in  other 
words — costs  us  money,  and  through  tying  the  classifica- 
tion on  to  the  dollar  mark  as  a  basis  it  is  pretty  sure  to 
be  inclusive  and  of  the  utmost  practical  utility.  The 
general  ledger  accounts,  therefore,  serve  as  our  starting 
point,  the  base  sheet  of  the  classification  comprising  the 
broad  general  subdivision  of  things  for  which  money  is 
paid  out. 
Thus: 

Capital  investment  in  land  and  buildings. 
Capital  investment  in  machinery  and  equipment. 
Cost  of  raw  materials  and  supplies  to  run  the  business. 
Cost  of  labor  and  material  chargeable  directly  to 

the  product. 
Cost  of  overhead  expense  for: 

Direct  manufacturing  departments. 
Commercial  (or  sales)  department. 
Business  (or  general  office)  departments. 
Auxiliary  manufacturing  departments. 

1  This  method  of  classification  and  symbolizing,  which  meets  industrial 
requirements  much  more  satisfactorily  than  any  other  which  the  writer 
has  encountered,  was  originally  invented  by  Oberlin  Smith  of  the  Ferra- 
cute  Machine  Co.,  and  subsequently  amplified  by  Henry  R.  Towne, 
F.  W.  Taylor,  Carl  G.  Earth,  and  others. 


144  FACTORY  STORESKEEPING 

Each  of  these  primary  groups  of  charges  is  then  sub- 
divided and  re-subdivided  to  any  degree  we  desire. 
From  the  raw  material  group  above  is  derived  the 
Details  of  the  stores  classification. 

Basis  of  Mnemonic  Symbols. — The  basis  of  the  make- 
up of  the  symbols  themselves  is  as  follows: 

First: — The  symbol  consists  of  a  combination  of 
capital  block  letters  (omitting  I,  0,  Q,  U),  and 
numerals. 

Second. — The  groups,  division,  subdivisions,  etc.,  are 
represented  by  letters,  these  letters  being  assigned  so  far 
as  possible  to  give  maximum  suggestiveness  (S  for  stores, 
D  for  direct  manufacturing  departments,  and  so  on) .  The 
significance  of  any  letter  depends  upon  its  position  in  the 
symbol  (just  as  is  true  of  our  decimal  system  of  number- 
ing) ;  a  letter  refers  to  and  limits  only  that  part  of  the 
whole  symbol  which  precedes  it,  it  includes  that  part 
which  follows  it. 

Third. — Numbers  are  used  in  all  cases  for  designating 
an  individual  unit  (inserted  ordinarily  just  before  the 
last  letter  of  the  symbol);  for  dimensions  (inserted 
ordinarily  near  the  beginning  of  the  symbol) ;  for  lot 
numbers  (written  after  the  last  letter  of  the  symbol); 
and  for  other  purposes  which  need  not  be  described  here. 

The  base  sheet  is  as  follows: 


CLASSIFICATION  OF  MATERIALS 


145 


A. 
B. 

C. 

D. 
E. 
F. 

G. 

H. 

J. 

K. 

L. 

M. 

N. 

P. 

R. 

S. 

T. 

V. 

W. 

X. 

Y. 

Z. 


BASE  SHEET   (ON   COST  BASIS) 

Auxiliary  Departments  Expense 
Business  (or  general  operating)  Depts. 

Expense 

Commercial    (or    selling)    Depts.  Ex- 
pense 

Direct  Manufacturing  Depts.  Expense 
Erection  (if  in  customer's  plant) 
Product  (worked  materials)  which  we 

manufacture 
Products  (worked  materials)  which  we 

manufacture — Grinders 
Product  (worked  materials)  which  we 

manufacture 
Product  (worked  materials)  which  we 

manufacture 
Product  (worked  materials)  which  we 

manufacture 
Product  (worked  materials)  which  we 

manufacture— Milling  Machines 
Product  (worked  materials)  which  we 

manufacture — Molding  Machines 
Product  (worked  materials)  which  we 

manufacture 
Product  (worked  materials)  which  we 

manufacture 
Product  (worked  materials)  which  we 

manufacture 

Stores,  or  raw  materials  and  supplies 
Product  which  we  manufacture 
Product  which  we  manufacture 
Product  which  we  manufacture 
Part    construction — Light    equipment 


Expense  or 
Overhead 


Product 


Stores 


Product 


and  tools  Part  Capital 

Machinery  and  motive  power — Heavy 

equipment  and  tools— Construction      Capital 
Land  and  Buildings — Construction 


146  FACTORY  STORESKEEPING 

Each  of  these  general  ledger  accounts  is  then  sub- 
divided. For  instance,  the  Auxiliary  Departments 
Expense  would  naturally  be  next  subdivided  into 
the  different  departments  considered  directly  auxiliary 
to  producing,  thus: 

Classification  of  Charges 

Auxiliary  Departments  Expense  A 

AE.  Engineering  Department  Expense. 
AH.  Heat — Light — Power  Department  Expense. 
AK.  Worked  Material  Store  Room  Expense. 
AM.  Maintenance  Department  Expense. 
AP.  Planning  Department  Expense. 
AS.  Stores  Room  Department  Expense, 
and  so  on.1 

At  this  stage  the  symbol  designates  the  particular 
department  itself  and  furnishes  the  first  subdivision  of 
Auxiliary  Expense  for  cost  collection  purposes  in  properly 
allocating  overhead  expense. 

The  next  step  is  of  course  to  separate  out  the  different 
kinds  of  overhead  expense  which  are  properly  chargeable, 
for  instance  to  the  Stores  Room,  thus 

Store  Room  Expense  AS 

ASA.  Miscellaneous  Labor  and  Expense. 
ASF.  Furniture,  Fixture  and  Apparatus-maintenance. 
ASR.  Reclamation  of  errors  of  this  department. 
ASS.  Stores  and  Supplies  used  in  Store  Room. 
ASW.  Wages  and  Salaries  of  Store  Room  personnel. 
ASZ.  Building  Repairs  to  this  Department. 

Thus,  when  a  table  used  by  the  storekeeper  is  repaired, 
the  charge  symbol  for  this  work  would  be  ASF  which 

1  In  practice,  one  sheet  should  be  reserved  for  one  step  in  the  sub- 
division, and  all  letters  of  the  alphabet  (except  I,  O,  Q,  and  U)  put  down  in 
order.  They  may  be  needed  later. 


CLASSIFICATION  OF  MATERIALS  147 

at  once  tells  the  accounting  folks  that  the  cost  of  this 
work  is  an  Auxiliary  overhead  expense  (A)  to  be  entered 
against  the  Store  Room  (AS)  for  furniture  maintenance 
(ASF).  Similarly,  stationery  supplied  the  storekeeper 
would  be  charged  to  ASS,  and  so  on,  the  totals  of  the 
AS-  charges  giving  the  total  overhead  expense  of  AS. 
Likewise  for  each  other  Auxiliary  (A)  Dept.,  the  total  of 
all  such  departmental  charges  constitute  the  total  A 
expense  for  the  period.  The  individual  and  total  B,  C, 
and  D  overhead  expenses  are  secured  in  like  fashion, 
when  they  may  be  distributed  to  the  product  in  any  one 
of  a  number  of  ways. 

Classification  of  Product. — Worked  Material  Classifica- 
tion.— The  same  sort  of  subdivision  of  each  product 
provides  a  pigeonhole  for  collecting  direct  charges  in- 
cident to  manufacture.  Thus  M,  molding  machines, 
may  be  subdivided  into  those  types  of  machines  which 
we  produce. 

Molding  Machines — M 

M-C  Core  Ramming  Molding  Machines 
M-H  Hand  Ramming  Power  Draft  Molding  Machines 
M-R  Plain  Power  Ramming  Molding  Machines 
then  each  of  these  further  subdivided  until  we  get  down 
to  individual  parts,  which  gives  the  worked  material 
classification,  for  designating  the  worked  materials  with 
the    operations    on    each,    and    for    allocating    charges 
against  each  separate  product. 

These  illustrations  have  been  given  before  taking  up 
the  stores  classification  partly  to  familiarize  the  reader, 
through  simple  examples,  with  the  general  method  of 
subdividing  the  classification  and  assigning  symbols, 
and  partly  that  he  may  see  the  tie-in  between  the 
stores  and  the  other  parts  of  this  whole  mnemonic 
classification.  This  relation  will  become  clearer  later  on. 

Classification  of  Stores. — In  subdividing  the  general 
ledger  account  S  Stores,  we  at  once  see  that  in  those  items 


148  FACTORY  STORESKEEPING 

which  we  carry  regularly  in  stock,  known  as  "classified 
stores/'  there  are  two  main  classes,  viz. 

1.  those  used  for  a  specific  purpose. 

2.  those  used  for  various  purposes. 

Those  stores  used  for  specific  purposes  may  be  for 

(a)  some  one  of  the  departments 
(6)  some  one  of  the  products 

(c)  some  special  use  which  it  may  be  desirable  to 
differentiate,  such  as  forms  for  office  use. 

The  first  step  in  classifying  stores,  therefore,  is  to  set 
down  under  S  the  letters  of  the  alphabet  (always  omitting 
I,  0,  Q,  and  U)  and  see  that  these  specific  purposes  are 
given  a  pigeonhole  in  accordance  with  the  previously 
devised  symbol  for  each.  Thus 


CLASSIFICATION  OF  MATERIALS  149 

Stores— S 

SA  Special  classified  stores  for  Auxiliary  (A)  Depart- 
ments only 

SB  Special  classified  stores  for  Business  (B)  Depart- 
ments only 

SC  Special  classified  stores  for  Commercial  (C)  Depart- 
ments only 

SD  Special  classified  stores  for  Direct  Manufacturing  (D) 
Departments  only. 

SE 

SF1    Printed  forms  of  all  kinds 

SG    Special  classified  stores  for  Grinders  (G)  only 

SH    (Reserved  for  other  products) 

SJ     (Reserved  for  other  products) 

SK    (Reserved  for  other  products) 

SL  Special  classified  stores  for  Milling  Machines  (L) 
only 

SM  Special  classified  stores  for  Molding  Machines  (M) 
only 

SN    (Reserved  for  other  Products) 

SP    (Reserved  for  other  Products) 

SR    (Reserved  for  other  Products) 

SS    Office  supplies,  exclusive  of  Printed  Forms  SF 

ST  (Reserved  for  other  Products,  or  sometimes  used 
for  Tools2) 

SV1  Classified  Stores  used  for  a  Variety  of  Products 

SW  (Reserved  for  other  Products) 

SX  Part  Construction  (X)  supplies,  such  as  chairs, 
typewriters,  etc. 

SY 

sz 

1  May  be  used  here  only  when  not  previously  used  to  designate  a 
product,  in  which  case  it  must  be  used  to  designate  stores  used  only  on 
that  product  (as  in  the  case  of  SG,  SL,  etc.). 

2  Small  tools  purchased  and  stored  in  bulk  in  the  store  room  under 
symbol  ST,  disbursed  in  units  and  thereafter  identified  by  symbol  T. 


150  FACTORY  STORESKEEPING 

Subdividing  the  first  four  of  these  classes — SA,  SB,  SC 
and  SD,  or  those  stores  which  are  used  in  some  specific 
department  only  and  which  for  the  sake  of  definiteness 
may  as  well  be  classified  under  that  department — we  of 
course  go  back  to  the  various  individual  departments 
under  Auxiliary,  Business,  Selling  and  Direct  Manu- 
facture, repectively,  as  listed  above  under  "  Classification 
of  Charges."  Thus,  subdividing  SA,  or  the  special 
classified  stores  for  Auxiliary  (A)  Departments  only:— 

Stores  for  Auxiliary  Departments — SA 

SAA 


SAE    Stores  for  Engineering   Department    (AE)    only 


SAH  Stores  for  Heat -Light -Power  Department  (AH) 
only. 


SAK   Stores  for  Worked  Material  Store  room  (AK)  only. 
SAM  Stores  for  Maintenance  Department  (AM)  only. 

SAP    Stores    for    Planning    Department    (AP)     only. 


SAS    Stores  for  Stores  Room  (AS)  only. 

The  same  subdivision  is  made  for  SB,  SC  and  SD; 
for  instance: 

SDF    Stores  for  Foundry  (DF)  only. 
SDM  Stores  for  Machine  Shop  (DM)  only, 
and  similarly  for  other  D,  C,  and  B  Departments. 


CLASSIFICATION  OF  MATERIALS  151 

The  next  step  is  to  indicate  the  particular  stores  used 
only  in  each  of  these  departments,  so  that  in  the  case  of 
the  Power  Department  (AH),  for  instance,  we  have 

Stores  for  Heat — Light — Power  Department  only — SAH 

SAH-A 

SAH-B  Boiler  Compounds 

SAH-C 

SAH-F  Fuel 


SAH-L  Lubricants  used  only  by  Heat-Light-Power  De- 
partment (for  lubricants  used  in  other  Depart- 
ments as  well  as  in  this  one,  see  SVL-,  pages  155-6) . 

This  brings  us  to  the  general  class  of  store,  and  the 
next  and  final  step  in  this  case  is  to  designate  the  particu- 
lar item  in  each  class.  This,  as  was  indicated  previously, 
is  done  by  the  use  of  a  numeral  before  the  last  letter 
of  the  symbol,  thus: 

Lubricants  used  by  Heat-Light-Power  Department  only— 

SAH-L 

SAH1L  Cylinder  oil 

SAH2L  Crankcase  oil^heavy 

SAH3L  Crankcase  oil — light 

SAH4L  Graphite — powdered 

SAH5L  Etc. 

SAH6L 

Because  of  the  variety  and  quantity  of  forms  custom- 
arily required  in  the  factory,  it  is  convenient  to  group  all 
printed  forms  under  SF,  or  in  some  other  suitable  place, 
separate  from  other  miscellaneous  office  supplies  (which 
may  be  placed  under  SS  or  less  conveniently  under  SV). 
The  subdivision  of  SF,  however,  usually  presents  diffi- 


152  FACTORY  STORESKEEPING 

culties,  in  that  there  are  many  forms  which  do  not  pertain 
solely  to  a  particular  department  but  travel  around  from 
one  to  the  other.  The  general  rule  is  to  pigeonhole  a 
form  in  the  department  which  originates  it  where  this  is 
possible,  placing  under  the  general  office  (see  SFBN  below) 
those  forms  which  may  originate  in  any  one  of  a  number 
of  departments.  This  is  illustrated  below: 

Printed  Forms  of  All  Kinds— SF 

SFA  Auxiliary  Department  (A)  Forms  only 

SFAA 

SFAE  Engineering  Department  (AE)  forms,  only 

SFAH  Heat-Light-Power  Department  (AH)  forms, 
only 

SFAP  Planning  Department  (AP)  forms,  only  and 

so  on. 
SFB  Business  (or  general  office)  department  forms  only 

SFBA 

SFBC  Cost  Department  (BC)  Forms  only 

SFBN  General  Management  (BN)  Forms  only 

Then  taking  the  forms  used  only  (or  originated)  in  the 
Planning  Department  SFAP,  we  get  by  the  use  of  num- 
bers as  before,  in  this  case  Used  to  designate  the  specific 
form: 

Printed  Forms  for  Planning  Department — SFAP 

SF1AP  Balance  of  work 

SF2AP  Master  Route  Card 

SF3AP  Piece  Route  Sheet 

SF4AP 

SF5AP 

SF6AP  Etc. 

Continuing  down  the  stores  base  sheet,  the  next  item 
is  SG,  or  Special  Classified  Stores  for  Grinders  (G  on  main 
base  sheet,  page  145)  only,  then  comes  SLor  Special  Classi- 


CLASSIFICATION  OF  MATERIALS  153 

fied  Stores  for  Milling  Machines  (L)  only,  and  SM  for 
Molding  Machines  (M)  only.  Subdividing  the  latter 
by  way  of  example,  we  get  S  followed  by  the  symbol  of 
the  machine  as  explained  above  under  "  Classification  of 
Product,"  page  147,  thus: 

Special  Classified  Stores  for  Molding  Machines 
Only—SM 

SMA 

SMC  Special    Stores    for    Core    Ramming    Machines, 
(M-C)  only. 

SMH  Special  stores  for  Hand  Ramming  Power  Machines 
(M-H)  only. 

SMR  Special  Stores  for  Plain  Power  Ramming  Machines 
(M-R)  only. 

Continuing  the  subdivision  of  each  of  these  as  sug- 
gested under  Classification  of  Product  there  is  provided 
a  pigeonhole  for  such  raw  materials  as  are  used  in  any 
particular  group  or  division  of  any  product  we  manufac- 
ture. Thus  the  symbol  SM-R1B  may  designate  a 
special  sand  guard  used  on  an  M-R  (Plain  Power  Ram- 
ming Machine)  only,  B  showing  that  it  is  part  of  the  Base 
Group  of  these  machines  and  the  numeral  1  designating 
the  specific  part.  It  must  be  remembered  that  any 
article  designated  by  S  is  a  raw  material  upon  which  no 
work  has  been  done  in  our  plant,  and  that  therefore  a 
symbol  $M-R1B,  $M-R2B  and  so  on  must  not  be  used 
to  designate  a  part  which  we  have  manufactured.  If  we 
manufactured  this  sand  guard,  the  S  in  the  symbol  would 
drop  out,  leaving  it  M-R  IB  in  accordance  with  the 
worked  material  classification.  This  point  may  be 
further  explained  in  this  way :  if  this  sand  guard  (special 
to  this  machine)  were  made  in  our  shop  through  process- 


154  FACTORY  STORESKEEPING 

ing  a  casting  purchased  outside  especially  for  the  pur- 
pose, the  casting  itself  (being  raw  material  to  us)  would 
take  the  symbol  SM-R1B,  and  it  would  retain  this 
symbol  as  long  as  it  remained  in  the  raw  state.  When  we 
have  worked  it,  however,  and  made  the  finished  sand 
•guard  of  it,  the  symbol  of  the  guard  would  be  M-R1B. 

The  next  subdivision  of  S  is  SV  or  Classified  Stores  used 
for  a  Variety  of  Purposes.  Into  this  miscellaneous 
pigeonhole  should  be  placed  only  those  articles  remaining 
after  everything  special  to  any  department  or  product  or 
use  has  been  placed.  It  is  a  catch-all,  voluminous  at  best ; 
it  should  not  be  made  unnecessarily  so  through  the  inclu- 
sion of  articles  which  may  be  more  definitely  placed 
elsewhere.  A  few  illustrations  of  this  part  of  the  Stores 
Classification  will  show  the  general  method. 


CLASSIFICATION  OF  MATERIALS  155 

Classified  Stores  Used  for  Various  Purposes — SV 

SV-A  Miscellaneous  stores  not  elsewhere  classified. 
SV-B  Brass  and  Copper  and  products  made  chiefly  from 

same 

SV-C  Cast  iron  and  products  made  chiefly  from  same 
SV-D 
SV-E 
SV-F 
SV-G 
SV-H 
SV-J 
SV-K 
SV-L  Liquids  and  semi-liquids  (see  also  SAHL  for  those 

used  only  in  the  Heat-Light-Power  Department). 
SV-M 
SV-N 
SV-P 
SV-R 
SV-S  Steel,   wrought  iron  and  products  made  chiefly 

from  same 
SV-T 
SV-V 
SV-W  Wood   and   products   made   chiefly   from   same 

sv-x 

SV-Y 

SV-Z  Fastening  devices — bolts,  nuts,  screws,  etc. 


156  FACTORY  STORESKEEPING 

Under  SAHL  (page  151)  was  listed  lubricants  used  only 
in  the  Power  Department,  such  as  cylinder  oil,  (SAH1L), 
heavy  crankcase  oil  (SAH2L)  and  so  on.  To  bring  out 
the  difference  in  cases  of  this  kind,  the  following  illustra- 
tion may  be  serviceable. 

Liquids  and  Semi-liquids  used  for  Various  Purposes— 

SV-L 

SV-LA  Adhesives 
SV-LB 

SV-LD  Disinfectants 
SV-LG  Gasoline 
Etc. 

Liquids  and  Semi-liquids — Adhesives — SV-LA 

SV-L1A  Glue 
SV-L2A  Cico 
SV-L3A  Library  Paste 

As  a  final  explanation  of  this  part  of  the  classification 
we  may  take  steel  (SV-S)  as  best  serving  to  illustrate  the 
finer  subdivisions  sometimes  desirable  and  to  show 
designation  of  dimensions,  makes,  composition  or  other 
information  which  may  be  necessary  under  particular 
conditions : 

Steel,  Wrought  Iron  and  Products — SV-S 

SV-SA  Angles 
SV-SB  " I"  Beams 
SV-SC  Channels,  "U"  Bars 
SV-SD  Band  Iron 
SV-ST  Tool  Steel 

Tool  Steels— SV-ST 
SV-STA    . 
SV-STB 

SV-STC  Octagonal  Stock 
SV-STD 


CLASSIFICATION  OF  MATERIALS  157 

SV-STE 

SV-STH  Hexagonal  Stock 
SV-STN  Rectangular  Stock 
SV-STR  Round  Stock 

Round  Tool  Steels—  SV-STR 

SV-ST1R  Jessops-carbon 
SV-ST2R  Bethlehem  H.  S. 
SV-ST3R  Atria-carbon 
SV-ST4R  Allen's— air  hardening 
SV-ST5R 

Insert  dimensions  between  SV  and  S  thus: 
SV1^ST2R  Bethlehem  High  Speed  Tool  Steel, 
Round,  \Y±'  diameter. 

Finally,  in  cases  where  it  is  desired  to  keep  each  ship- 
ment of  this  or  other  material  separate  and  designate  it 
as  such,  it  may  be  given  a  serial  lot  number  and  stored 
separately.  In  this  case,  as  was  indicated  previously, 
the  lot  number  would  appear  at  the  end  of  the  symbol, 
so  that  the  complete  symbol  for  lot  number  35  of  this 
steel  would  be 

SV1MST2R35 

Purchase  specifications,  data  relating  to  tests,  and  all 
other  information  as  regards  Bethlehem  high  speed 
round  tool  steel  would  be  filed  in  the  office  under  the 
symbol  SV-ST2R.  The  same  is  true  in  the  case  of  all 
other  articles.  The  balance  sheets  for  each  article 
would  of  course  also  be  arranged  alphabetically  by  sym- 
bol, and  where  practicable  the  articles  themselves  would 
be  located  in  the  store  room  alphabetically  by  symbol. 

Other  Classifications. — Besides  the  classifications  illus- 
trated briefly  in  the  preceding  pages — the  Charging, 
Worked  Material,  and  Stores  Classifications — as  part 
of  this  composite  mnemonic  classification  are  also  the 
Tool,  the  Machine  Equipment  and  Work  Place,  the 


158  FACTORY  STORESKEEPING 

Functional,  and  the  Real  Estate  and  Buildings  classifica- 
tions, the  complete  story  tying  together  into  one  inter- 
locking system  all  components  of  the  business.  As 
such,  it  is  in  use  today  in  a  great  many  different  industries 
adapted  of  course  to  meet  the  special  requirements  of 
each,  but  conforming  extremely  closely  to  the  basic 
elements  as  presented.  Its  principal  value  is  realized 
only  when  it  is  used  in  its  complete  form,  although  the 
justification  of  this  necessarily  piecemeal  presentation 
lies  in  the  fact  that  the  Stores  Classification  may  be  used 
alone  with  considerable  benefit  in  definiteness  and  in  the 
saving  of  clerical  work. 


CHAPTER  X 

MATERIAL  ACCOUNTING;  INVENTORIES; 
STATISTICS 

SUMMARY:  Material  Accounting.  Fundamentals  of  Accounting. 
Opening  Entries.  Collecting  Costs.  Closing  Entries.  Summary  of 
Transactions — Method  of  Securing  Perpetual  Inventory — Pricing 
Materials  for  Issue — Inventories:  The  Periodic  Physical  Inventory — 
The  Perpetual  Inventory.  Supplementary  Checks  on  Book  Balances. — 
Inventory  Adjustments — Statistics. 

Material  Accounting.    Fundamentals  of  Accounting.— 
Adequate  accounting  is  as  essential  to  material  control 
as  is  proper  storage,  replenishment  and  regulation  of 
issue,  and  the  basis  of  such  accounting  is  to  tie  the  cost 
figures  into  the  general  accounts.     This  means  that: 

I.  Every  expense  incurred   during  the  period  must 
eventually  show  on  the  books  against  Product,  against 
Plant,  or  against  Profit  and  Loss,  and 

II.  A  perpetual  book  inventory  of  material,  checked 
frequently  with  material  actually  on  hand,  must  be  main- 
tained. 

A  summary  of  the  accounting  transactions  for  materials 
through  which  these  objects  are  accomplished  is: 

I.  The  cost  of  all  purchases  of  material  must  be 

debited  when  bought  to  :— 
(a)  General  Ledger  (controlling)  account  Stores 

and 

(6)  Subsidiary  account  by  item  purchased  (on 
individual  balance  sheets). 
Such  cost  may  or  may  not  include  trans- 
portation   charges,    according    to    whether 
these  are  added  to  the  specific  article  affected, 
which  is  the  more  accurate  way,  or  taken  to 
an  expense  account. 

159 


160  FACTORY  STORESKEEPING 

II.  The  cost  of  all  material  disbursed  must  be  debited 
to  a  specific  charge  account  (plant,  product,  or 
expense)  and  credited  to 

(a)  Subsidiary    account    by    item    issued    (on 

individual  Balance  Sheets)  and, 

(b)  General  Ledger  (controlling)  account  Stores 

(or  Worked  Material).  These  principles 
of  accounting  of  materials  may  be  illustrated  by  typical 
book  transactions  with  accompanying  discussion  and 
explanation  at  various  stages. 

Opening  Entries. — A  purchase  order  for  300  ft.  high 
speed  tool  steel  I%"  diameter  has  been  issued.  The 
cost  comes  to  $1,430.40  including  transportation  charges 
which  in  this  case  will  be  added  to  the  unit  cost.  (See 
Balance  Sheet,  Fig.  5,  page  61.)  When  this  bill  is  paid 
the  following  entry  is  made  in  the  ledger: 

I.     Stores  (G.  L.  Acct.) $1,430.40 

To       (Cash1) $1,430.40 

At  the  same  time  this  transaction  will  be  entered  in 
the  balance  sheet  (subsidiary  account)  for  this  high  speed 
steel,  symbol  (SV1%  ST2R)  which  adds  $1,430.40  to 
the  book  inventory  of  this  particular  item  of  material. 
Similarly  for  all  other  purchases,  so  that  the  sum  of  the 
amounts  on  the  various  balance  sheets  should  equal  the 
total  debits  to  the  general  ledger  account  Stores.  Should 
some  of  this  material  be  rejected  upon  receipt,  a  corre- 
sponding credit  slip  must  be  put  through  to  adjust  these 
accounts. 

Collecting  Costs. — Whenever  any  of  this  steel  is  dis- 
bursed for  any  purpose  a  stores  issue  showing  symbol  of 
material  issued,  and  symbol  of  charge  account,  is  made 
out  for  the  number  of  feet  called  for,  say  30  feet.  This 
issue  may  first  go  to  the  balance  sheet  for  this  item  to  be 
apportioned,  when  the  material  is  wanted  the  issue  then 

1  Intermediate  entries  omitted  for  brevity,  since  they  illustrate  no 
additional  point  in  this  connection. 


MATERIAL  ACCOUNTING  161 

goes  to  the  storekeeper  and  the  30  feet  are  disbursed. 
The  stores  issue  then  goes  back  to  the  balance  sheet 
where  the  clerk  multiplies  the  unit  cost  per  foot,  say 
$4.00,  by  the  number  of  feet  issued  and  enters  the  trans- 
action on  the  proper  balance  sheet,  showing  what  account 
is  charged,  say  Shop  Expense,  symbol  DMS.  This 
subsidiary  account  (balance  sheet  SV1%  ST2R)  thus 
shows  that  Shop  Expense,  DMS,  has  been  charged  with 
$120.00  worth  of  steel,  and  that  the  inventory  value  of 
the  steel  itself  as  shown  on  its  balance  sheet  has  been 
reduced  by  this  $120.00,  or  to  $1,310.40. 

The  value  as  shown  on  this  issue  slip  (together  with 
others  which  follow  the  same  procedure)  then  goes  to  the 
general  books  where  the  entry  is  made : 

II.  Shop  Expense  DMS $120.00 

To    Stores $120.00 

The  procedure  is  exactly  the  same  for  all  other  dis- 
bursements— thus  instead  of  an  issue  of  steel  to  be 
charged  to  Shop  Expense  DMS,  we  may  have  $100.00 
worth  of  this  steel  (25  feet)  issued  for  use  on  product  L, 
Milling  Machines;  the  issue  will  pass  through  exactly 
the  same  transaction  except  that  the  amount  will  be 
charged  to  L  instead  of  the  DMS  thus : 

III.  Work  in  Process:  Milling  Machines  L  $100.00 

To    Stores $100.00 

Or  again  a  worked  material  part  for  Molding  Machines, 
symbol  M,  made  previously  for  stock  at  a  cost  of  $50.00 
and  charged  to  Worked  Material  in  Stores  M,  may  be 
issued  for  use  on  product  Grinders,  G-.  In  this  case  work 
in  Process  G  must  be  charged  and  Worked  Material  in 
Stores  M — credited:— 

IV.  Work  in  Process:    Grinders  G $50.00 

To  Worked  Material  in  Stores:  Mold- 
ing   Machines    M $50.00 

11 


162  FACTORY  STORESKEEPING 

Where  material  has  been  issued  in  excess  or  is  other- 
wise to  be  turned  back  to  the  store  room  after  having 
been  charged  out,  a  credit  slip  is  made,  showing 
again  the  symbol  of  material  and  the  account  (originally 
charged  to)  which  should  be  credited:  thus  $5.00  worth 
of  the  above  worked  material  M-  may  not  be  needed  on 
product  G-.  This  credit  passes  through  the  same 
routine  as  the  issue  described  except  that  the  entries  are 
reversed  so  that  the  quantity  and  value  returned  are 
added  on  the  proper  balance  sheet  M-,  the  slip  then 
passing  to  the  general  books  where : 
V.  Worked  Material  in  Stores  M-  is  debited  $5.00  and 
Work  in  Process  G-  is  credited.  Similarly  for  other 
credits. 

Closing  Entries. — Actually  of  course  each  slip  does  not 
pass  directly  to  the  general  books  for  individual  entry, 
but  after  clearing  through  the  balance  clerk  they  are 
filed  by  charge  symbol,  allowed  to  accumulate  for  a  few 
days  or  a  week,  and  from  time  to  time  those  on  hand  are 
summed  and  entered  on  cost  collecting  cards  from 
which  at  the  end  of  the  period  summary  statements  are 
sent  to  the  general  books.  Some  of  these  statements 
follow : 

The  original  debit  to  Stores  is  made  from  the  in- 
voice. For  subsequent  transactions,  however,  the  book- 
keeper has  no  way  of  knowing  what  credits  should  be 
entered  to  Stores  or  other  accounts,  or  what  accounts 
should  be  charged  with  the  issues  unless  he  is  told  by  the 
cost  clerk  who  receives,  files,  and  summarizes  the  stores 
and  worked  material  issue  and  credit  slips.  At  the  end 
of  the  period,  therefore  one  summary  statement  is  sent 
to  the  bookkeeper  showing  the  total  stores  disbursements 
chargeable  against  various  accounts.  This  is  simply 
a  summary  of  stores  issues  less  stores  credits  against  each 
charge  symbol:— 


MATERIAL  ACCOUNTING  163 

Distribution  of  Stores  for  Period  Ending — 192— 

A $1,000.00 

B 500.00 

C 300.00 

D 120 . 00  (See  transaction  II  above) 

G .,       800.00 

L '.  *      100.00  (See  transaction  III  abqve) 

M 3,000.00 

T 50.00 

Y..  1,500.00 


$7,370.00 

This  total  amount  of  $7,370.00  would  thereupon  be 
credited  to  Stores  by  the  bookkeeper  as  is  illustrated  by 
the  single  entry  in  transaction  II  above,  and  at  the  same 
time  the  Work  in  Process  accounts  (G,  L,  M  and  T)  as 
well  as  the  expense  (A,  B,  C  and  D)  and  construction  (Y) 
accounts  would  each  be  debited  for  its  respective  amount, 
as  illustrated  in  transaction  III. 

Where  some  of  the  product  turned  into  the  store  room 
is  either  partly  finished  or  may  be  used  on  products  other 
than  that  whose  symbol  it  bears  and  for  which  it  was 
originally  made,  it  is  necessary  to  transfer  material  and 
values  between  these  accounts  and  to  present  a  state- 
ment of  these  transfers  so  that  they  may  be  taken  up  on 
the  general  books.  This  case  is  illustrated  in  transac- 
tion IV  above  where  $50.00  worth  of  parts  previously 
placed  in  stores  for  product  M-  were  issued  to  make 
product  G-,  in  transaction  V  an  unused  portion  of  this 
being  later  credited  back.  The  cost  clerk  must  in  such 
cases  note  from  which  Worked  Material  in  Stores 
accounts  the  good  were  issued  (as  shown  on  worked 
material  issues),  and  the  total  credit  to  these  must  equal 
the  total  debits  to  the  Work  in  Process  accounts.  This 
statement  to  the  bookkeeper  would  look  as  follows: — 


164  FACTORY  STORESKEEPING 

Debit  the  following  Work  in  Process  Accounts 

D $185. 

G 45 .    (See  transactions  IV  and  V  above) 

L 75. 

M 290. 

T 65. 

Y..  700. 


$1,360. 

Credit  the  Following  Worked  Material  in  Stores 
Accounts 

G. $600. 

L 90. 

M 45 .    (See  transactions  IV  and  V  above) 

T..  625. 


$1,360. 

Summary  of  Transactions. — Transactions  have  been 
indicated  as  follows.  These  will  first  be  shown  indi- 
vidually : 

I.  Purchase  300  feet  1M  in.  high  speed  tool  steel  (SV1% 
ST2R)  for  $1,430.40,  or  $4.77  per  foot  (here  called  $4.00 
to  avoid  decimals) : 

Stores 


Cash 1,430.40 

II.  Issue  of  30  feet   SV1%   ST2R  at  $4.00  for  Shop 

Expense  DMS. 

Shop  Expense  DMS 
Stores . .     120.00  | 

III.  Issue  of  25  feet  SV1%  ST2R  at  $4.00  for  Work  in 

Process  L : 

Work  in  Process  L- 


Stores..  100.00 


MATERIAL  ACCOUNTING 


165 


IV.  Issue  of  $50.00  worth  of  Worked  Material  in  Stores 
M-,  for  Work  in  Process  G: 

Work  in  Process  G- 


Worked    Material  in 
Stores  M-...      50.00 

V.  Credit  of  $5.00  worth  of  Worked  Material  in  Stores 
M-,  to  Work  in  Process  G. 


Work  in  Process  G- 


Worked    Material 
in  Stores  M-.  . 


5.00 


Each  of  these  transactions  would  be  entered  on  the 
respective  balance  sheet  (stores  or  worked  material)  for 
the  item  in  question. 

Posting  from  the  statements  sent  to  the  bookkeeper 
and  taking  a  balance  of  these  accounts  at  this  stage 
(assuming  that  these  are  the  only  transactions)  would 
show : 


Cash 


I.  Stores $1,430.40 


Stores 


I.  Cash $1,430.40 


1,430.40 


II.  Shop  Expense 

DMS .  .      120.00 

III.  Work  in  Pro- 
cess L-..  100.00 


Balance . 


1,210.40 
M30.40 


Balance 1,210.40 

Shop  Expense  DMS 


II.  Stores 120.00 

Work  in  Process  L- 

III.  Stores..          100.00  I 


166 


FACTORY  STORESKEEPING 


Work  in  Process  G- 


IV.  Worked  Material 
in  Stores  M-.  .    50.00 


Balance 


50.00 
45.00 


V.  Worked  Ma- 
terial in  Stores 
M- 

Balance , . 


5.00 
45.00 
50.00 


Worked  Material  in  Stores  M- 


V.  Work  in   Proc- 
ess G  ........ 

Balance.  .  . 


5.00 

^.5  .00 
50.00 


IV.  Work  in  Proc- 
ess G. . 


Balance 


50.00 


50.00 
45.00 


Summary  of  Balances: 


Stores 


1,210.40  | 

Shop  Expense  DMS 


120.00 
Work  in  Process  L- 
100.00  | 
Work  in  Process  G- 

45.00  | 
Worked  Material  in  Stores  M- 


45.00 


Stores  thus  started  with  a  debit  of  $1,430.40  when  the 
steel  was  bought,  then  this  was  reduced  by  $120.00  for 
the  benefit  of  Shop  Expense  DMS  and  by  $100.00 
for  Work  in  Process  L-,  leaving  a  closing  balance  of 
$1,210.40  as  the  total  current  inventory  of  goods  on 
hand.  Running  through  the  individual  balance  sheets 
we  should  find  the  same  balance  shown  there,  in  this  case 


MATERIAL  ACCOUNTING  167 

the  example  has  been  confined  to  the  high  speed  steel 
SV1%  ST2R  which  on  its  balance  sheet  was  originally 
charged  with  the  $1,430.40  purchased  but  which  now 
would  show  that  this  value  has  been  reduced  to  $1,210.40 
through  the  issues  against  DMS  and  L-.  In  order  to 
make  these  figures  reliable,  constant  care  must  be  exer- 
cised to  see  that  the  inventory  on  the  balance  sheets 
agrees  with  the  actual  physical  inventory  in  the  store 
room,  or  to  make  an  inventory  adjustment  (see  topic, 
page  172)  in  case  they  do  not  agree  and  cannot  otherwise 
be  brought  into  harmony. 

Method  of  Securing  Perpetual  Inventory. — The  method 
of  securing  a  perpetual  inventory  of  work  in  process  and 
of  worked  material  in  stores  is  also  illustrated  in  the 
preceding  transactions.  To  complete  this  part  of  the 
record,  at  the  end  of  the  period  the  bookkeeper  must  be 
sent  also  a  statement  showing  the  cost  of  each  class  of 
product  finished  or  partly  finished  so  that  the  proper 
transfer  may  be  made  on  the  books  from  Work  in  Process 
to  Worked  Material  in  Stores  or  to  Product,  and  a  state- 
ment showing  the  distribution  of  direct  wages  and  a 
statement  of  miscellaneous  charges  for  similar  posting. 
With  these  statements,  handled  in  just  the  same  way  as 
those  illustrated,  a  complete  running  inventory  of  Stores 
(raw  material  and  supplies),  Worked  Material  in  Stores 
(partly  worked  parts),  Work  in  Process  (that  currently 
in  the  shop),  and  Product  (completely  finished  work)  is 
maintained  so  that  the  books  may  be  completely  closed 
at  any  time  with  greater  accuracy  than  is  usually 
obtained  at  the  annual,  semi-annual,  or  quarterly  closing 
where  complete  physical  inventory  must  be  taken. 

Pricing  Materials  for  Issue. — In  the  preceding  trans- 
actions it  was  assumed  that  the  price  at  which  materials 
were  "sold"  by  the  store  room  upon  issue,  or  " bought" 
back  upon  credit,  was  the  weighted  average  cost,  includ- 
ing transportation  charges,  of  all  of  that  item  of  materali 
which  had  been  received:  This  is  but  one  way.  The 
alternative  methods  of  pricing  materials  for  issue  are : 


168  FACTORY  STORESKEEPING 

1.  Keep  each  lot  distinct  and  issue  each  at  actual 
price  paid  for  the  lot. 

2.  Combine  lots  and  issue  all  at  cost  or  current  market 
price,  whichever  is  lower. 

3.  Combine  lots  and  issue  all  at  current  market  price. 

4.  Combine  lots  and  issue  all  at  weighted  average 
price  to  date. 

5.  Issue  all  materials  at  predetermined  " standard" 
price,  regardless  of  actual  cost  except  as  this  may  lead 
to  a  modification  of  the  "  standard." 

Each  of  these  methods  has  its  adherents,  and  much 
time  may  be  wasted  scrapping  with  different  cost 
accountants  as  to  the  theoretical  accuracy  of  one  or 
another.  In  finally  choosing  between  them,  however, 
certain  practical  considerations  must  govern:— 

1.  A  theoretically  accurate  cost  may  not  be  worth  the 
expense   of  obtaining  it.     The  clerical  labor  involved 
must  always  be  considered  as  must  also  the  chances  of 
wrong  results  through  mistakes  in  figuring  complicated 
methods. 

2.  Cost  finding  and  price-making  are  only  distantly 
related  in  that  many  factors  other  than  cost  (no  matter 
how    accurately    determined)    must    be    considered    in 
setting  prices.     A  cost  should  tell  the  facts  as  to  what  the 
actual  expenses  of  manufacture  were,  after  which  allow- 
ances for  current  fluctuations  in  material  prices  and 
other  factors  may  be  considered  in  setting  prices.     Do 
not  destroy  the  possibility  of  finding  actual  profits  by 
letting  fictitious  figures  get  into  costs. 

3.  The  intent  at  time  of  purchase  should  be  considered 
in  the  distribution  of  costs — if  the  purchase  was  for  a 
long  period  the  costs  may  well  be  spread  over  the  whole  of 
that  period,  and  so  on. 

4.  What  it  is  desired  that  the  cost  figures  show  will 
affect  the  treatment  of  expenses.     Thus  costs  obtained 
through  methods  1 ,  2  and  3  will  follow  the  ups  and  downs 
of  the  market ;  method  4  will  spread  these  fluctuations  out 


MATERIAL  ACCOUNTING  169 

into  a  smoother  curve;  while  5  does  neither  of  these 
but  results  in  a  straight  line  which  tells  the  truth  neither 
as  regards  current  market  fluctuations  nor  actual  average 
prices  paid. 

In  practice  the  methods  most  widely  used  are  1  and  4, 
both  of  which  tell  the  truth  but  with  slightly  different 
emphasis  and  either  of  which  tells  it  in  a  way  ordinarily 
serviceable  for  all  practical  cost  purposes.  Method  4 
is  advocated  in  most  cases  because  it  requires  less  clerical 
work  when  both  current  posting  and  checking  periodical 
inventories  are  considered,  because  it  results  in  less 
" jumpy"  material  cost  figures,  and  because  a  direct 
summing  up  of  outstanding  values  on  the  various  individ- 
ual balance  sheets  checks  (or  should  check,  without  the 
necessity  of  multiplying  each  lot  of  each  item  by  its 
actual  cost)  with  the  lump  sum  inventory  balances  as 
shown  on  the  General  Ledger.  This  method  (4)  may  be 
seen  in  detail  on  the  balance  sheet  illustrated  in  Chap.  V, 
page  61. 

Inventories. — At  various  places  in  the  preceding 
discussions  the  question  of  inventory  keeping  with  the 
resulting  book  transactions  has  been  touched  upon. 
These  loose  ends  will  be  gathered  together  in  a  summary. 

The  Periodic  Physical  Inventory. — <The  periodic  physical 
inventory  (annual,  semi-annual,  or  quarterly),  with  its 
bustle,  confusion  and  inaccuracies,  is  no  longer  tolerated 
by  the  best  managers,  if  for  no  other  reason  than  because 
modern  business  demands  a  more  immediate  and  reliable 
knowledge  of  progress  than  can  be  secured  in  this  way. 
The  physical  inventory  (the  actual  counting  of  stock  on 
hand)  is  indispensable  and  the  results  of  this  count  must 
be  checked  with  the  books,  but  at  the  end  of  twelve,  six 
or  even  three  months  is  not  the  time  to  do  it.  The 
manufacturing  industry  is  yet  to  be  found  where  the 
perpetual  inventory  is  not  perfectly  applicable,  more 
accurate,  cheaper,  and  of  infinitely  greater  utility  than 
is  the  periodic.  It  is  simple  to  initiate,  easy  to  operate, 


170 


FACTORY  STORESKEEPING 


and,  with  proper  checks,  accurate  even  beyond  practical 
requirements. 

The  Perpetual  Inventory. — This  may  be  secured  in  one 
or  more  of  several  ways,  the  central  idea  being  simply 
that  the  balances  on  hand,  both  in  quantity  and  in  value 
of  each  item,  be  kept  reasonably  correct  at  all  times. 
These  ways  are  as  follows: 

1.  The  storekeeper  is  given  each  day  a  few  items  to 
count  or  the  balance  clerk  may  make  the  count,  so  that 


BF6AP 
LM.Co. 

STORES  INSPECTION  REPORT 

Please  send  an  inspection  report  of  the  Amount  of  the  following  goods  on  hand 

at 

hour 

month 

day 

year 

To: 

Symbol 

Description 

Quantity 
on  Tag 

Quantity  on  Hand                                tSSl&S* 

Signed: 

FIG.  36. — Stores  count.  The  only  way  accuracy  of  perpetual  inventory 
records  may  be  assured  is  through  an  actual  physical  count.  This  illus- 
trates one  method  of  reporting  the  results  of  such  a  count. 

in  the  course  of  say  four  months  every  item  in  the 
store  room  will  be  covered  at  least  once.  Such  counts 
may  be  made  whenever  work  is  slack,  and  consists  in 
actually  counting  balance  on  hand  in  the  bin  or  pile  and 
reporting  quantity  found  to  the  balance  clerk  (see  Fig. 
36).  The  balance  clerk  then  checks  the  amount  actually 
in  the  store  room  with  the  balance  as  shown  on  the 
individual  balance  sheet,  making  such  inventory  adjust- 
ments as  may  be  necessary  upon  investigation. 

2.  When  a  new  lot  of  any  item  is  received,  a  bin  tag 
for  quantity  accepted  is  made  out  in  the  receiving  depart- 
ment, this  tag  accompanying  the  goods  to  the  store  room, 
where  it  may  be  checked  by  the  storekeeper.  The 
storekeeper  then  counts  the  balance  on  hand  which 


MATERIAL  ACCOUNTING  171 

should  agree  with  the  balance  on  the  old  tag,  notes  any 
discrepancy  on  old  tag  and  sends  it  to  the  balance  clerk 
where  it  is  checked  with  the  proper  balance  sheet.  The 
quantity  on  hand  is  entered  on  the  new  tag,  added  to  the 
quantity  shown  as  just  received,  and  new  tag  and  new 
lot  placed  in  the  bin.  This  procedure  allows  the  count  to 
be  made  when  there  is  least  in  the  bin. 

3.  Where  a  separate  bin  tag  is  made  out  and  retained 
at  the  bin  for  each  separate  lot  received,  when  a  tag 
becomes  exhausted  or  shows  zero  balance,  a  count  may  be 
made   of    quantity    on   hand    (including   all  lots),  this 
checked   with   the  sum  of  balances  as  shown  on  the 
several  tags,  the  actual  quantity  on  hand  entered  on  the 
exhausted  tag  and  this  returned  to  the  balance  sheets 
for  checking. 

4.  Where  all  new  lots  received  are  entered  to  one 
bin  tag,  when  this  becomes  full  a  count  is  made,  the 
result  indicated  on  exhausted  tag  which  is  sent  to  balance 
clerk  and  a  new  tag  made  for  future  use. 

Supplementary  Checks  on  Book  Balances. — Intermedi- 
ate checks  may  be  secured  which  will  aid  in  keeping 
the  books  and  the  bin  contents  in  agreement  between  the 
physical  counts.  These,  however,  should  be  looked  upon 
simply  as  auxiliary  checks,  since  nothing  should  be 
allowed  to  replace  the  actual  physical  count  for  any 
length  of  time.  Such  checks  are: 

(a)  The  balance  as  shown  on  the  bin  tag  may  be  entered 
on  each  stores  issue  after  it  is  filled.  This  issue,  when 
it  reaches  the  balance  clerk  provides  a  current  check  on 
book  and  tag  balances  (but  not  on  actual  goods  on  hand) . 

(6)  When  a  tag  becomes  exhausted  the  balance,  as 
per  this  tag,  or  the  sum  of  the  balances  on  the  remaining 
individual  lot  tags,  may  be  entered  and  the  tag  sent  to 
the  balance  sheet. 

The  utilization  of  one  or  more  of  these  methods  will 
result  in  accurate,  current  knowledge  of  amounts  of 
material  on  hand  with  the  least  work  on  the  part  of  the 


172  FACTORY  STORESKEEPING 

storekeeper  and  with  no  interruption  to  the  regular 
activities  of  the  shop.  Equally  important,  it  will  enable 
a  closing  of  the  books  as  regards  inventory  at  any  time 
without  confusion  and  with  maximum  accuracy.  In 
this  connection  it  must  be  remembered  that  records  of 
inventory,  whether  periodic  or  perpetual,  must  be 
retained  in  such  permanent  form  as  to  enable  the  auditor 
to  make  what  checks  he  desires. 

Inventory  Adjustments. — It  has  been  stated  that  a 
physical  count  is  the  only  way  to  make  book  records  of 
inventory  dependable.  Clerical  errors  will  unavoidably 
occur  in  the  mere  recording  of  transactions  so  that  the 
figures  themselves  will  be  incorrect;  besides  this,  from 
various  causes  the  amount  actually  on  hand  will  be  greater 
or  less  (usually  the  latter)  than  the  balance  shown  on 
the  books  even  with  no  mistakes  in  entry.  An  accurate 
count  at  frequent  intervals  is  necessary  to  keep  the  two 
in  reasonable  adjustment. 

When  a  discrepancy  is  discovered  an  Inventory 
Adjustment  must  be  made  so  that  the  books  shall  tell 
the  truth.  This  may  be  done  in  one  of  two  ways. 
Assume  that  the  books  show  100  units  on  hand,  total 
value  of  $200.00,  or  $2.00  per  unit,  but  that  a  hand  count 
shows  only  98  in  the  bin  and  investigation  has  failed  to 
account  for  these  two  missing  parts: 

1.  The  value  of  the  missing  items  may  be  absorbed 
by  the  remaining  items,  thus: 

On  Hand  Total  Value  Unit  Value 

100  $200.00  $2.00 

98  As  per  count  $200.00  $2.041 

Future  issues  would  be  priced  at  $2.041  each.  In 
this  case  no  adjustment  is  required  on  the  general 
ledger,  since  the  total  value  of  the  inventory  has  not 
been  changed. 


MATERIAL  ACCOUNTING  173 

2.  The  value  of  the  missing  items  may  be  charged  to 
an  Inventory  Adjustment  account  or  taken  direct  to 
Profit  and  Loss  thus : 

On  Hand  Total  Value  Unit  Value 

100  $200.00  $2.00 

2  Inventory  4.00 

Adjustment 


$98  $196.00  $2.00 

Future  issues  would  be  priced  at  $2.00  each.  In  this 
case  Stores  on  the  general  ledger  would  be  credited 
and  Inventory  Adjustment  debited  for  the  missing  $4.00. 

It  will  readily  be  appreciated  that  the  first  method, 
(that  of  covering  the  loss  through  absorption  by  the 
remaining  stock),  is  not  one  to  be  encouraged,  although 
the  bookkeeper  should  not  be  burdened  with  a  multitude 
of  insignificant  adjustments.  The  middle  road  consists 
in  establishing  maximum  amounts  which  may  be 
absorbed  by  method  1,  supplemented  by  the  requirement 
that  discrepancies  (either  for  any  amount  or  only  for 
amounts  above  this  maximum)  be  sent  to  the  proper 
official  for  approval. 

Statistics. — In  addition  to  the  statistics,  quotation 
summaries,  charts,  curves  and  so  on  which  form  part 
of  the  equipment  by  which  the  purchasing  agent  follows 
market  trends  and  general  business  tendencies,  much 
internal  information  covering  material  may  be  system- 
atically gathered  for  the  guidance  of  various  officials. 
The  following  table  indicates  some  of  the  more  important 
reports,  who  uses  them  and  for  what  purpose,  source 
of  information,  how  often  compiled  and  best  form  for 
presenting  data.  The  classes  of  information  needed  in 
different  industries  will  of  course  vary  and  those  listed 
below  are  intended  to  be  suggestive  only. 


174 


FACTORY  STORESKEEPING 


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APPENDIX 

The  following  table  shows  the  result  of  a  preliminary 
investigation  to  determine  stowage  requirements  for 
different  standard  articles  commonly  carried  in  every 
metal  working  store  room.  The  table  is  presented 
primarily  in  the  hope  that  further  investigation  may  be 
found  practicable,  in  view  of  the  striking  similarity  of 
results  so  far  obtained. 


175 


176 


FACTORY  STORESKEEPING 


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INDEX 


Accounting  for  materials,   159-69 

basis  of,  159-60 

charges  for  materials  issued, 

8,  101,  137-8,  160,  167-9 

perpetual   inventory    control, 

167,  171-2 
pricing  materials  for  issue,  59, 

96,  167-9 
statements,  163-4 
transactions,  160-7 
Adjustments  in  inventory,    172-3 
Administrative    control    of    mate- 
rials, 3,  8,  15,  35,  51-2,  70, 
72-5,  99-101 

Allowance  in  setting  low  limits,  47 
Amount  to   order,    determination 

of,  44,  73-5 
Anticipatory       purchasing       (see 

Speculative  Purchasing}. 
Apportionment  of  material  needs, 
7,  11-12,  43,  45,  57,  59, 
62-6     . 
Approval  of  replenishment  orders, 

19-20,  28,  51,  72-4 
to    change    amount    requisi- 
tioned (Fig.  10),  73 
Article,  definition,  127 
Auditor,  function,  29,  95-7 

B 

Balance  clerk,  function  and  qualifi- 
cations, 27 

perpetual  inventory,  58,  119- 
21,  170-1 

sheet  for  materials,  choice  of, 
53-4 

files  (Fig.  9  and  text),  68 

location,  35 

use,  19,  54-60 

see  Classified  Stores  Balance 
Sheet. 


Balance  clerk,   Unclassified  Stores 

Balance  Sheet. 
Worked     Material     Balance 

Sheet. 

Bill  of  material,  use,  18 
Bins,  capacities  of  various,  131-2, 

Appendix 
and   racks    (see    Store    Room 

Equipment). 
Bin  label,  sample  (Fig.  15),  105 

use,  21 
tag,    sample     (Figs.     29-30), 

118-119 

use,  21,  91-2,  170-2 
Block,  definition,  127 


Cancellation   of   purchase   orders, 

notice  of,  58 
Capacities  of  storage  units,  131-2, 

Appendix 
Cash      discount      on     purchases, 

95-7 
Centralized  vs.  decentralized  store 

rooms,  100-102 
Charges  for  materials  issued,  96, 

101,  137-8,  160,  167-9 
Classes  of  materials,  15-6 
Classification,  140-158 

basis  of  industrial,  143-6 

of  mnemonic,  144 
definition,  140 
of  charges,  146 
of  product,  147 
of  stores,  147 
other,  157-8 
rules  for,  140-1 
samples  of,  140-158 
Classified  stores,  definition,  16 

balance  sheet,  basis  of 
operation,  for  apportion- 
ment, 44r-5 


177 


178 


INDEX 


Classified  stores,  requirements  of, 
for  apportion- 
ment, 40,  42-52, 
54-66 

sample  (Fig.  5),  61 
for    minimum   limit, 

40,  41,  54 
sample  (Fig.  4),  55 
for  schedule,  40,  52, 

66-7 

sample  (Fig.  6),  65 
steps  in  setting  up,  for  appor- 
tionment, 
45-52 

in  operation  of,   for 
apportionment, 
57-60,  62-6 
use,  19 

Column,  definition,  127 
Contracts,    recording    changes    in 

purchasing,  80,  96 
Cost  department,  function,  29 

location,  35-6 
Course,  definition,  127 
Credit    memorandum    (see    Stores 

Credit). 
Cycle  in  material  handling,  17 

D 

Delivery  times  and  dates,  32,  47>^ 

72,  77,  79,  80,  82 
Departmental    store    rooms    and 

supplies,  100,  101,  137 
Departments,  location  of  various, 

34-7 

Double  binning,bins  for,  109-10, 112 
definition,  118 
inventory   control,    use   in, 

119-122 

operation  of,  118-123,  130 
space  required,  123 
turnover  of  goods,  use  in, 

122-3,  134 
Dust,  protection  against,  134 


E 


Engineering  department,  function, 
26 


Engineering  department,  responsi- 
bility for   quality   and 
inspection,  26,  28,  30- 
31,  83,  87,  89,  90,  92-5 
for    specifications,    45-7, 

92 
Equipment  of  store  room  (see  Store 

Room). 
Explosion,  protection  against,  132 


Factory  supplies,  definition,  15 
and  spare  parts,  control, 
136-8 

Fire  protection,  132 

Flexibility  in  store  room  equip- 
ment, 106-13 

Follow-up  of  outstanding  pur- 
chases, orders,  78-83,  95 

Forms,  size  and  color  of  paper,  18 
use  of  various,  18-23 

Freight  register,  use,  20,  88-9,  96 

Function  of  manufacturing  plant,  1 


Hand  count  (see  Physical  Count). 
Heap,  definition,  127 


I 


Ideal  material  system,  6-8 
Identification  tag,  use,  22 
Importance  of  material  function,  3 
Indexing    store    room    equipment 

(Fig.  14),  104 
Information  necessary  for  material 

control,  23-4,  45-52,  53, 

56-60 
Inspection,  function,  92-5 

kinds  of,  94-5 
.  report  (see  Material  Inspection 

Report). 
responsibility     for,     26,     28, 

30-1,     83,     87,     89,     90, 

92-5 
Instances  of   material  losses    (see 

Savings  Possible). 


INDEX 


179 


Interchangeable    racks    and    bins 

(see  Store  Room). 
Inventory,  adjustments,  172-3 
control    in    accounting,     167, 

171-2 
through     double     binning, 

119-122 

in  maintenance  dept.,  135-9 
periodic  physical,  169—70 
perpetual,  58,  119-21,  170-73 
supplementary  checks  on  book 

balances,  171-2 
Invoice,  checking  and  paying,  95-7 

copies,  95-7 
Item,  definition,  127 


Layout  of  store  room,  99-104 
Location  of  various  departments, 

34-7 
Losses  in   material  handling    (see 

Savings  Possible). 
Lot,  definition,  127 
Low  limit,  determination  of,  43-4, 

47-8 

M 

Maintenance  stores,  135-9 
Market  as  basis  of  material  replen- 
ishment, 38 

Materials,     accounting     for     (see 
Accounting) . 

administrative  control,  3,  8, 
15,  35,  51-2,  70,  72-5, 
99-101 

classes  of,  15-6 

control,  necessary  for  efficient 

production,  1-14,  17 
rules  for,  24-5 

cycle,  17 

data  sheet  (Fig.  2),  46 

function  in  manufacturing, 
scope  of,  1-3,  17,  23-5, 
26,  30,  34,  39,  53,  70,  85, 
98,  136,  140,  159 

information  necessary  for  con- 
trol of,  23-4,  45-52,  53, 
56^60 

inspection  report,  use,  20 


Materials,  receipts,  summary  (see 
also  Notification  of 
Material  Received),  92 
regulation,  a  function  of  pro- 
duction dept.,  8,  15,  35, 
51-2,  72-5 

replenishment  (see  Replenish- 
ment). 

rules  for  control  of,  24-5 
simplification  of,  3-6,  93 
standardization  of,  3-6,  93 
statistics  of,  53,  173-4 
system  must  be  adapted,  fore- 
word, 18,  26,  29,  30,  33, 
37,  41,  42,  49,  53-4,  56, 
84,  98-100,  102,  107 
system  not  self -operating,   8, 

36,  60 
theory  of  supply  service,  6-7, 

23 

Metal  racks  and  bins,  118 
Minimum  limit,  dangers  in  use  of, 

11-2,  41-2,  54 
definition,  40 
Mnemonic     .  classification       (see 

Classification). 
Modification  of  purchase  contracts, 

recording,  80,  96 
Morgue  store  room,  118 
Move  order,  sample  (Fig.  33),  122 
use,  22 

N 

Notification  of  materials  received, 
copies  of,  91,  95-7 
requirements  of,  91 
sample  (Fig.  13),  91 
use,  20,  58 


O 


Oral  orders,  72 

Order  point  (see  Amount  to  Order). 

Ordering  materials   (see  Purchase 

Order,   Purchasing   Dept., 

Replenishment). 
Organization  for  material  control, 

29-33,  35,  37,  70,  86-8, 

93,  100-1 


180 


INDEX 


Organization,  chart  (Fig.  1),  33 
Overflow  bins,  113-4 

bin    tag,    sample    (Fig.    25), 
114 

use,  21,  113 


Package,  definition,  127 

Parts  list,  use,  18 

Percentage   for   safety  in   setting 

low  limits,  47 
Periodic    physical   inventory    (see 

Inventory). 

Perpetual     inventory      (see     In- 
ventory). 

Personnel    dealing    with    material 

control,  26-9,  30,  49,  70 

high  grade  help  necessary,  8, 

27,  60,  85 
Physical  count  (see  also  Inventory), 

170 

form  for  (Fig.  36),  170 
inventory          adjustments, 

172-3 

location    of    offices,     34-7 

necessity    of,    in    perpetual 

inventory,    58,    120,    170 

supplementary    checks    on 

book  balance,  171-2 
Piece,  definition,  127 
Pile,  definition,  128 
Pilfering,   protection  against,    135 
Planning  department,  function,  29, 

35 

location  of,  35 

Postal  follow-up  of  purchase  or- 
ders (Fig.  12A-B),  81 
Production  department,  function, 

scope  of,  1-2,  35 
responsible  for  material  con- 
trol,   8,    15,    35,    51-2, 
72-5 
for  quantity,   2,   31,    51, 

72-5 
responsible    for     time    to 

renew,  32,  47 

dependent   on    material    con- 
trol, 1-14 


Production    department,    require- 
ments as  basis  of  material 
replenishment,  6,  38-52 
types  of,  as  related  to  material 

replenishment,  39,  54 
Protection  of  materials,  103,  132-5 
from  deterioration,  134 
dust,  134 

fire    and    explosion,    132 
pilfering,  135 
rust,  133 

Purchase    order,    cancellation    of, 
copies  of,  58 
original,  78,  79 
requisitioned,  78,  79 
purchasing  department  by 
serial  number,  78, 
80,  96 

tickler  copy,  78,  80-2 
balance  and  receiving,  58, 
78,     82,     89-90,     95-7 
other  copies,  78 
follow-up  of,  through  tick- 
ler, 78-83,  9.5 
by  postal,  81 

frequency  of  issuing,  48-9 
requirements,  77-8 
sample  (Fig.  11),  76 
short  carbon  for  receiving, 

89-90 
use,  20 
requisition  (see  Replenishment 

Order). 

specifications,  kinds  of,  92-5 
responsibility  for,  45-7,  92 
use,  3-6,  18 

Purchasing,  speculative  (see  Spec- 
ulative Purchasing). 
indication   of   where   to    pur- 
chase, 50-1 
contracts,  modifications  of,  80, 

96 

department,  70-84 
function,  70-84,  93 
location,  36 
records,  77-84 
responsibility  for  cost,  32 
for  time  to  renew,  32,  47, 
72,  77,  78 


INDEX 


181 


Q 


Quality  and  inspection,  responsi- 
bility for,  26,  28,  30-31, 
83,  87,  89,  90,  92-5 

Quantity,  responsibility  for,  3,  31, 
51,  72-5 

Quantity  held  in  various  bins, 
131-2,  Appendix 

Quantity  to  order  (see  Amount  to 
Order}. 


Racks  and  bins   (see  Store  Room 

Equipment}. 

Raw  material,  definition,  15 
Receiving  department,  86-92,  93 
copies    of    purchase    order 

for,  89-90 

function,  28,  31,  86-7,  89-92 
location,  34 

Replenishment — bases    of,    38-52 
through  amount  on  hand,  40, 

41 

sample  balance  sheet  for,  54 
through  amount  available,  40, 

42-52 
eample    balance   sheet   for, 

44-5,  54-66 

through    a   schedule,    40,    52 
sample   balance  sheet   for, 

6&-7 

Replenishment  order,  approval  of, 

19-20,     28,     51,     72-4 

to  change  amount  ordered 

(Fig.  10),  73 
copies  of,  52^ 
requirements,  50 
sample  (Fig.  3),  49 
use,  19,  75 

Reports,  163-4,  173-4 
Requisition      (see     Replenishment 
Order},  Stores  Issue,  Worked 
Material  Issue}. 
Reservation      of      material      (see 

A  pportionment} . 

Returned- goods    report,    use,    21 
Row,  definition,  127 


Rules  for   material  control,   24-5 
Rust  prevention,  133 


Savings  possible  through  material 
control,  9-14,  30,  31,  34, 
35,  38,  40,  41-2,  45,  52, 
53,  60,  71,  80,  85,  93, 
94,  95,  100,  106,  111-113, 
122,  124,  126,  129,  140, 
158 
Scheduling  material  needs,  40, 

52,  66-7 

Section,  definition,  127 
Short  carbon  of  purchase  order  for 

receiving,  89-90 
Simplification    of    materials,    3-0, 

93 
Space  reserve  in  storage  bins,  114, 

131-2 

Specifications  (see  Purchase  Speci- 
fications}. 
Speculative     purchasing,     8,     24, 

31-2,  38,  51,  72-5 
approval  to  change  amount 

requisitioned,  73 
Stack,  definition,  127 

pyramidal,  definition,  128 
wedge,  definition,  127 
Standard  lot,  definition,  127 

use,  131,  137 
racks    and    bins     (see    Store 

Room  Equipment}. 
Standardization  of  material,  3-6, 

92-3 

Statistics  of  material,  53,  173-4 
Stores,  definition,  15 

classified,  definition,  16 
count,  sample  (Fig.  36),  170 

use,  23,  58,  170-1 
unclassified,  definition,  16 
Stores  credit,  sample  (Fig.  32),  121 

use,  22,  162 
issue,  pricing,  96 

sample  (Fig.  31),  120 
use,  22,  160 

system  (see  Material  System}. 
Storekeeper,  function,  28,  29 


182 


INDEX 


Storekeeper,    physical    count,    58, 

119,  120,  170-71 
Store  room,  98-139 

arrangement,    layout,     99- 

104 
capacities   of  various   bins, 

132,  Appendix 
centralized  or  decentralized, 

100-102 
equipment,  standard  racks 

and  bins,  106-123 
samples  (Figs.  16-24,  26- 
8),     108-112,     115-117 
minor,  123-126 
flexibility     in     equipment, 

106-13 

indexing,  104-106 
location,  34 
protection,  132-5 
requirements,  98,  102 
space  reserve  in  bins,   114, 

131-2 

Stowage,    capacities,    131-2,     Ap- 
pendix 

definition,  127-8 
rules  for,  128-32 
units  (Fig.  34),  128 
Summary  of  material  receipts,  92 
Supplies  and  spare  parts,  control 

of,  136-8 

Supply  service,  theory  of,  6-7,  23" 
Symbolization,  140-158 
definition,  141 
rules,  141-3 
examples,  140-158 
System     (see     Material     System}. 


Tag    (see    Bin    Tag,   Identification 
Tag,  Overflow  Bin  Tag). 


Theory  of  material  supply  service, 

6-7,  23,  39 
Tickler  copy  of  purchase  order  (see 

Purchasing  Order,  Copies 

of). 
Time  to  renew  supply,  32,  47,  72, 

77 

Tier,  definition,  127 
Tools    and    fixtures,    control    of, 

138-9 
Tool  check,  sample  (Fig.  35),  138 

use,  138-9 
Traffic  department,   function,   28, 

86,  88-90 
location,  34 

Transportation  men,  function,  28 
Turnover       of       goods,      savings 

through,  13-14 
through     double     binning, 

122-3,  134 

U 

Unclassifies  stores,  balance  sheet, 

operation,  67-8 
sample  (Fig.  8),  66-7 
use,  19 
definition,  16 
Unit,  definition,  127 

W 

Worked  materials,  balance  sheet, 

operation,  67 
sample  (Fig.  7),  65 
use,  19 

control  similar  to  stores,  16 
credit,  use,  22 
definition,  15-6 
issue,  use,  22 
received  in  stores,  use,  22 
Works     manager,     function,     28, 
51-2 


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